Saturday, February 21, 2015

Greek and euro partners have agreed in debt dispute – Reuters Germany

Greek and euro partners have agreed in debt dispute – Reuters Germany


– Tom Körkemeier


BRUSSELS (Reuters) – Greece has averted an exit from the euro zone and the debt dispute with international donors been settled.


The Euro finance ministers agreed with the Greek government on Friday evening for an extension of the current aid program for four months in which Greece must stick to the agreed reform requirements. Both German Finance Minister Wolfgang Schaeuble and his Greek counterpart Yanis Varoufakis expressed satisfaction after the agreement in Brussels. The European Central Bank (ECB) signaled its willingness to accept Greek debt again as security.


Before the extension is finally approved by the euro-countries, Greece must submit by Monday a list of reforms, which are then examined by the European Commission, the International Monetary Fund (IMF) and the ECB. Thereafter, the euro zone finance ministers want to discuss in a conference call about whether the measures in accordance with the obligations of the country are. If that is the case, he would present the extension of the Bundestag for approval, Schäuble said. He could live with the preliminary agreement, added the CDU politician, who had a request from Greece for further assistance on Thursday rejected yet. Varoufakis called the result of the meeting of euro zone finance ministers a small step in a new direction for his country.


The purpose of the extension is the successful completion of the rescue program as Euro group boss Jeroen Dijsselbloem made clear. Base were the condition s in the current agreement. The flexibility given to the best use. The Euro Group also decided that bonds of euro rescue fund EFSF continue to be worth around ten billion euros to recapitalize Greek banks during the period of extra time available. The money must however be released by the banking supervisory authorities of the ECB. Ending four months will be used to negotiate further proceedings with Greece. The agreement with the Greek government is the first step to restore mutual trust, Dijsselbloem said.


Greece said in the joint final statement to also withdraw any agreed reform measures and to meet the claims of all creditors. The budget surplus (excluding interest) in the Greek budget should be “reasonable”. So far, the Euro countries had asked for a three percent surplus this year.


The time to reach an agreement had become scarce because the current auxiliary and reform package ends on 28 February – after the insolvency had threatened. In addition to the Federal Government, the other participating countries were locked in the euro zone against excessive concessions to the new link-wing government in Athens. The debt-ridden Greece is preserved by the euro zone and the IMF since 2010 with 240 billion euros before the national bankruptcy.





After the agreement there is for the government in Athens, according to reports from the Governing circles no reason to impose capital controls. In addition, the ECB is willing to re-establish special rules for the adoption of Greek debt, an insider told the central bank. When the done, but had not yet been decided.


The ECB recently had special rules for the local banks are tilted because of the dispute over the support program for Greece, because they no longer expected a successful completion of the agreed reforms. The Greek financial institutions can therefore no longer be deposited government bonds with junk credit as collateral at the ECB. Since then, the banks are mainly dependent on emergency aid from the Greek central bank but again must be approved by the ECB. The financial institutions suffer from a massive outflow of deposits.


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