Eurogroup ponders precautionary credit line for Greece

EU finance ministers at Thursday’s Eurogroup meeting had a broad understanding that the IMF should continue being involved after Greece exits its bailout but decisions concerning this role have been postponed to December 8

Eurozone officials believe that Greece needs to stay on a tight program following an early exit to the bailout due to political risks. Dutch Finance Minister Jeroen Dijsselbloem told reporters on Thursday that Greece will probably need a precautionary credit line. He also said that the International Monetary Fund (IMF) should play a role in the future of the Greek program with follow-up support by the European Stability Mechanism (ESM), the euro area’s permanent rescue fund.

“Taking into account the still-fragile market sentiment and the many reform challenges still lying ahead, there is strong support for a precautionary credit line in a form of an existing ESM tool called the ECCL, an Enhanced-Conditions Credit Line,” said Mr. Dijsselbloem, following the Eurogroup meeting of EU finance chiefs on Thursday. “While the technical details would still need to be worked out, I think it is crucial that the current 5th review is concluded.”

Government sources state that the Greek side wants a precautionary credit line to be comprised of 8 billion euros from 11.5 billion euros that Greece has borrowed through the Hellenic Financial Stability Fund (HFSF) and an additional six billion euros from the profits that Eurozone member states made off Greek bonds. The IMF, on its part is seeking to maintain a more active role after December.

EU Economic and Monetary Affairs Commissioner Pierre Moscovici said that a decision concerning Greece’s future will be taken at the Eurogroup meeting on December 8.