Greece bail-out offer accepted by collectors
Athens has list of reforms accepted by creditors in bid for four month cash reprieve 
A ticking clock: Greece has four days before its bail-out expires
Photo: Bloomberg
• AEP: Greece scrambles to keep bail out deal alive
• Athens submits “comprehensive” list of proposals to Brussels this morning
• ECB and IMF give cautious verdict on reform list
• Greek markets close 10pc up on the day
• Extension will require ratification by 18 eurozone parliaments
17.30 This is what Greece’s repayment schedule looks like for the rest of the year. The country faces a tough March when it has T-bill redemptions and a €1.5bn loan repayment to the IMF due.
After that, July and August are also crucial months. By this point, Greece will have had to have agreed to a third-bail out programme as its four-month extension will be up.
17.15 The Greek government is still face a funding crisis as it is due to make series of repayments of its loans and bond redemptions in March.
An Athens government official has been quoted as saying the government is looking at two options to tide it over until April; the issuing of short-term debt in the form of T-bills or a request for the ECB to return the interest it has made on Greek debt.
The possibility of granting of either measures is uncertain. The president of the Eurogroup said earlier today the ECB was no closer in raising the limit of T-bill issuance. Meanwhile, Greece is only due to get its interest payments returned to it once it has completed its bail-out programme.
Acc to a FinMin official, the 2 ways the Greek gov’t will seek to close funding gap: i) additional Tbills issuance ii) €1.9bn bonds rebate
— Yannis Koutsomitis (@YanniKouts) February 24, 2015
16.45 The markets are certainly rejoining on the news about Greece. The FTSE 100 has hit an all time high, breaking a 15-year record to close at 6,949.63
The FTSE 100 is now at the highest level in history. Here it is since 1995 – lots of ups and downs
— Ed Conway (@EdConwaySky) February 24, 2015
16.10
Greek FinMin Official: Discussions With Partners On Greek Funding Gap Expected To Begin From Today
— Live Squawk (@livesquawk) February 24, 2015
16.05 Greek media are reporting elements of the country’s ruling Leftist party are not happy about parts of the proposals put forward by its government.
In particular, Energy Minister Panagiotis Lafazanis seems to have raised objections over the planned privatisations of the country’s assets, including the sale of power grid operator, ADMIE.
16.00 In other eurozone news, the ECB today launched a snazzy new €20 banknote
New €20 banknote unveiled in Frankfurt today http://t.co/Txggutqc3d
— ECB (@ecb) February 24, 2015
15.55 Athens list of reform proposals “could have been written by the Eurogroup itself” says Carsten Brzeski of ING.
But as Mr Brzeski notes, although the reforms are all good and well on paper, the government stll has to put forward some concrete legislative plans by April if it is to receive the €7.9bn it needs to complete it’s programme.
Here he is in full:
The bigger test for Greece will be at the end of April, the deadline by which Greece will have to present details and legislation of the planned reforms.
If successfully done, the negotiations on a third bailout package, including the postponed discussion on Greek debt sustainability will start and could give rise to new tensions. In the short term, our view is that the Greek situation should calm down, at least until end of April.
15.42 The last two days have Greek seen stocks soar on hopes that the country will stay in the eurozone, for another four months at least.
15.28
#Greece Athens market closes for the day in celebrational mood: +9.81%, banks +17.25%
— Yannis Koutsomitis (@YanniKouts) February 24, 2015
15.10 With two-thirds of the Troika now coming out as cautious on Greece’s bail-out deal, the early optimism of the day has subdued somewhat.
What we know: 2 out the troika 3 have signalled that the Greek list may not be up to scratch. It’s going to be a difficult month of March
— Bruno Waterfield (@BrunoBrussels) February 24, 2015
15.09
Just met a leading Greek minister. Chuckling about EMU deal. “Went really well”. (I take no view: reporting on their cognitive universe)
— A Evans-Pritchard (@AmbroseEP) February 24, 2015
15.05 The other part of the Troika, the European Central Bank, have now given their thoughts on developments today.
In a letter to the Eurogroup, central Bank chief Mario Draghi has said Greece’s plans do not “elaborate on concrete proposals and commitments that can be assessed by the institutions in respect to growth, public finances and financial stability.”
Mr Draghi continues: ” we note that the commitments outlined by the authorities differ from existing programme commitments in a number of areas.
In such cases, we will have to assess during the review whether measures which are not accepted by the authorities are replaced with measures of equal or better quality in terms of achieving the objectives of the programme.
Hardly a ringing endorsement.
Now it’s @ECB ‘s term to rain on the parade http://t.co/JMBm8trAVc
— Bruno Waterfield (@BrunoBrussels) February 24, 2015
14.50 Those IMF concerns are a reminder that although Greece’s eurozone creditors are happy with what Athens are proposing, the Troika can still pull the plug on Greece at any time.
The ‘institutions’ of the ECB, IMF, and European Commission will now be carrying out a review of the Greek economy before releasing its first disbursement of funds by April at the earliest.
14.40 Confirmation that the Eurogroup has rubber-stamped the bail-out extension.
The Eurogroup today discussed the first list of reform measures presented by the Greek authorities, based on the current arrangement, which will be further specified and then agreed with the institutions at the latest by the end of April. The institutions provided us with their first view that they consider this list of measures to be sufficiently comprehensive to be a valid starting point for a successful conclusion of the review.
We therefore agreed to proceed with the national procedures with a view to reaching the final decision on the extension by up to four months of the current Master Financial Assistance Facility Agreement.
We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close coordination with the institutions in order to allow for a speedy and successful conclusion of the review.
14.35 In perhaps the most awkward revelation of the day, it seems the source of the leaked Greek proposals was none other than Declan Costello – the same man at the European Commission who Yanis Varoufakis reportedly submitted the plans to last night.
Ohwellohwellohwell…. Look who’s the author of the Greek proposals pdf leak.
— Yannis Koutsomitis (@YanniKouts) February 24, 2015
Here’s Ambrose from yesterday:
Baffled by reports that Greek proposal will not be presented till Tuesday. Athens sent it to Declan Costello at EC mid-day Monday
— A Evans-Pritchard (@AmbroseEP) February 23, 2015
14.26 Well not everyone is happy. The IMF, one of the ‘institutions’ that will ultimately decide whether Greece gets any more money, has said Athens proposals “are not conveying clear assurances that the Government intends to undertake the reforms envisaged in Memorandum of Economic and Financial Policies.”
In a letter to the President of the Eurogroup, Fund chief Christine Lagarde adds the Greek proposals do not provide “clear commitments to design and implement the envisaged comprehensive pension and VAT policy reforms.”
And all this after Mr Varoufakis said he was thoroughly on board with the Fund’s views on Greece’s progress last week.
Yikes! #IMF not on board with approval of #Greece list. Excerpt from letter from @Lagarde to @J_Dijsselbloem
— Peter Spiegel (@SpiegelPeter) February 24, 2015
14.20 That positive news has seen Greece’s three-year bond yields fall to the level they were last at when Syriza came into office in late-January.
14.15 Greece’s creditors are satisfied for now. But the new Syriza government will still face a domestic struggle to convince their public they are sticking by their pre-election promises.
Our International Finance Editor is in Athens getting a flavour of how today’s reforms are being reported in the local press.
Greece’s Varoufakis said in London weeks ago completed privatisations wouldn’t be reversed. Surprised being reported as a Syriza retreat
— A Evans-Pritchard (@AmbroseEP) February 24, 2015
14.10 The agreement will still need the approval of all 18 of Greece’s fellow eurozone parliaments. The Bundestag has already said it will vote on the deal this Friday.
The current programme is due to expire this Saturday, on February 28.
Following #Eurogroup teleconference decision national procedures for extension of the Greek programme can begin #Greece
— Valdis Dombrovskis (@VDombrovskis) February 24, 2015
13.59 It’s done. The bail-out extension has been officially approved by Greece’s creditors. Rejoice!
The Slovakian finance minister has tweeted the following:
#eurozone deal with #Greece reached on Fri holds. Greeks have lots of heavy-lifting to do until end-April. We all want to see numbers now.
— Peter Ka?imír (@KazimirPeter) February 24, 2015
13.08 In less encouraging news, the European Central Bank has said it is unlikely to resume its ordinary lending operations to Greek banks before the beginning of March.
The central bank banned the acceptance of Greek bonds as collateral for its cheap loans earlier this month. This was widely interpreted as a signal the ECB did not think Athens and its creditors could come to a satisfactory arrangement to extend its bail out after February 28.
But even with a deal now on the cards, Mario Draghi and co won’t be rushing to reinstate their waiver for the next 10 days at least.
#ECB Said Unlikely to Restore Greek Waiver Before March 5 Meeting. Maybe longer.
— Paul Gordon (@pgordon66) February 24, 2015
13.00 That teleconference between eurozone finance ministers should be kicking off around now.
Most the news from Brussels has been encouraging today. That’s given way to a more than 8pc rise in Athens stocks, who are having their best day since February 10.
12.30 The European Commission has written to its finance minister counterparts at the Eurogroup, and have dubbed Greece’s reforms “sufficiently comprehensive to be a valid starting point for a successful conclusion of the review.”
In particular, the Commission say they are ” encouraged by the commitment to combat tax evasion and corruption, inter alia through efforts to modernise tax and custom administrations, as well as to pursue reforms to modernise the public administration.”
You can read the full letter HERE.
11.40 Ireland was hailed as the poster-child for eurozone reforms by the president of the Eurogroup earlier today, and one of the country’s government ministers has been talking about the Irish experiences dealing with the Troika back in 2011.
Bruno Waterfield reports:
Brendan Howlin, the Irish minister for public expenditure, has been giving advice to Greece this morning here in Brussels.
He was centrally involved in Ireland’s 2011 renegotiation of parts of the Irish bailout programme after Fine Gael and Labour were elected following popular hostility to austerity measures after the troika had taken over economic policy the year before.
That renegotiation is now the model for Greece after Syria won elections last month.
He said the Irish package, worth only about half a billion euro at the time compared to the billions Greece needs, was accepted by the troika although talks were “difficult.”
Tactically we differed from Greece in as much that we did a lot of that below the waterline as opposed to in the full glare of publicity.
Within the first 100 days, we determined that we would reverse the minimum wage cut, which we did, that we would have a new stimulus package for the tourism sector by reducing the rate of VAT on the tourism product and the rate of PRSI on those employed in the tourism sector.”
Every negotiation we had was extremely difficult because there was a process of building trust that we were going to deliver on our commitments. We made extraordinary changes in the programme over time as that trust developed.”
11.18 Lots of positive murmurings coming from all corners about the acceptance of Greece’s reforms list. It sounds like it will be sufficiently comprehensive to get a rubber-stamp when finance ministers convene at 1pm today.
Greek list is sufficiently comprehensive to be valid starting point for conclusion of review, says @EU_Commission
— Bruno Waterfield (@BrunoBrussels) February 24, 2015
Greek proposals to Eurogrp shd sail thru. Solid social democratic platform. Nothing threatening. Many good promises http://t.co/ePYrgxApFV
— George Magnus (@georgemagnus1) February 24, 2015
11.15 In the submitted letter, the new Greek government is promising to overhaul its VAT and pensions system, while also rooting out tax evasion and fraud.
The government also wants to tackle the humanitarian crisis in the country, and is promising to provide food stamps, and basic provisions of housing and electricity.
Significantly, the letter promises that these measures will have “no negative fiscal effect.”
11.11
This list will be approved by the Eurogroup, even w reservations. It’s much more comprehensive & detailed than what was ‘leaked’. #Greece
— Yannis Koutsomitis (@YanniKouts) February 24, 2015
11.09
This list will be approved by the Eurogroup, even w reservations. It’s much more comprehensive & detailed than what was ‘leaked’. #Greece
— Yannis Koutsomitis (@YanniKouts) February 24, 2015
11.05
German Vice-Chancellor Gabriel says he is “cautiously optimistic” that an agreement on #Greece will be reached (via DPA)
— Open Europe (@OpenEurope) February 24, 2015
11.00 The full text of the seven-page letter submitted by Yanis Varoufakis to the Eurogroup has now been released by Reuters.
You can read it in full here.
Some highlights:
I. Fiscal structural policies
Tax policies – Greece commits to:
• Reform VAT policy, administration and enforcement. Robust efforts will be made to improve collection and fight evasion making full use of electronic means and other technological innovations. VAT policy will be rationalised inrelation to rates that will be streamlined in a manner that maximises actual revenues without a negative impact on social justice, and with a view to limiting exemptions while eliminating unreasonable discounts.
• Modify the taxation of collective investment and income tax expenditures which will be integrated in the income tax code.
• Broaden definition of tax fraud and evasion while disbanding tax immunity
• Modernising the income tax code and eliminating from it tax code exemptions and replacing them, when necessary, with social justice enhancing measures.
• Resolutely enforce and improve legislation on transfer pricing.
• Work toward creating a new culture of tax compliance to ensure that all sections of society, and especially the well-off, contribute fairly to the financing of public policies.
Public spending – The Greek authorities will:
• Review and control spending in every area of government spending (e.g.education, defence, transport, local government, social benefits)
• Work toward drastically improving the efficiency of central and local government administered departments and units by targeting budgetary processes, management restructuring, and reallocation of poorly deployed resources.
• Identify cost saving measures through a thorough spending review of every Ministry and rationalisation of non-salary and non-pension expenditures which, at present, account for an astounding 56% of total public expenditure.
• Implement legislation (currently in draft form at the General Accounts Office -GAO) to review non-wage benefits expenditure across the public sector.
Social security reform – Greece is committed to continue modernising the pension system. The authorities will:
• Continue to work on administrative measures to unify and streamline pension policies and eliminate loopholes and incentives that give rise to an excessive rate of early retirements throughout the economy and, more specifically, in the banking and public sectors.
• Consolidate pension funds to achieve savings.
• Phase out charges on behalf of ‘third parties’ (nuisance charges) in a fiscally neutral manner.
• Establish a closer link between pension contributions and income, streamline benefits, strengthen incentives to declare paid work, and provide targeted assistance to employees between 50 and 65, including through a Guaranteed
Basic Income scheme, so as to eliminate the social and political pressure for early retirement which over-burdens the pension funds.
Policies to promote growth
Privatisation and public asset management – To attract investment in key sectorsand utilise the state’s assets efficiently, the Greek authorities will:
• Commit not to roll back privatisations that have been completed. Where the tender process has been launched the government will respect the process, according to the law.
• Safeguard the provision of basic public goods and services by privatised firms/industries in line with national policy goals and in compliance with EU legislation.
• Review privatisations that have not yet been launched, with a view to improving the terms so as to maximise the state’s long term benefits, generate revenues, enhance competition in the local economies, promote national economic recovery, and stimulate long term growth prospects.
• Adopt, henceforth, an approach whereby each new case will be examined separately and on its merits, with an emphasis on long leases, joint ventures 5 (private-public collaboration) and contracts that maximise not only government revenues but also prospective levels of private investment.
Labor market reforms – Greece commits to:
• Achieve EU best practice across the range of labour market legislation through a process of consultation with the social partners while benefitting from the expertise and existing input of the ILO, the OECD and the available technical assistance.
• Expand and develop the existing scheme that provides temporary employment for the unemployed, in agreement with partners and when fiscal space permits and improve the active labour market policy programmes with the aim to updating the skills of the long term unemployed.
• Phasing in a new ‘smart’ approach to collective wage bargaining that balances the needs for flexibility with fairness.
This includes the ambition to streamline and over time raise minimum wages in a manner that safeguards competiveness and employment prospects.
The scope and timing of changes to the minimum wage will be made in consultation with social partners and the European and international institutions, including the ILO, and take full account of advice from a new independent body on whether changes in wages are in line with productivity developments and competitiveness.
IV. Humanitarian Crisis – The Greek government affirms its plan to:
• Address needs arising from the recent rise in absolute poverty (inadequate access to nourishment, shelter, health services and basic energy provision) by means of highly targeted non-pecuniary measures (e.g. food stamps).
• Do so in a manner that is helpful to the reforming of public administration and the fight against bureaucracy/corruption (e.g. the issuance of a Citizen Smart
Card that can be used as an ID card, in the Health System, as well as forgaining access to the food stamp program etc.).
• Evaluate the pilot Minimum Guaranteed Income scheme with a view toextending it nationwide.
• Ensure that its fight against the humanitarian crisis has no negative fiscal effect.
10.50
#Eurogroup conference call on Greece at 14.00 this afternoon.
— Jeroen Dijsselbloem (@J_Dijsselbloem) February 24, 2015
10.40 That’s all from Mr Dijsselbloem in front of his parliamentary committee today. He gets a smattering of applause from his counterparts.
The President of the Eurogroup was grilled quite thoroughly on Greece, and reaffirmed that today’s possible rubber-stamping of Athens prosposals would only mark the “first step” in trying to secure the country’s future in the eurozone.
Still it was all quite reassuring stuff for Greek ears. The bloc’s finance ministers will now convene later on this afternoon to decide to give the go-ahead to the proposals.
10.22 Greece is leading the slide into deflation in the eurozone, with consumer prices in the country falling by -2.6pc in January. This was the biggest drop in inflation across the bloc, which suffered its biggest annual fall in prices since the euro launched in 1999.
In worrying news for eurozone policymakers, 17 out of 19 countries are now gripped by negative prices, including Germany, Finland Latvia, Estonia who now join the deflation club for the first time.
10.16 The ECB will not allow Greek to issue more short-term debt in the form of T-bills in a bid to protect the stability of its banks, says Mr Dijsselbloem.
This all but rules out the Greek government’s demands for a “bridging loan” to help keep the country afloat. Earlier this month, the ECB also withdrew its oridinary lending facility from Greek banks, forcing them to rely on emergency funding.
09.55
If debt sustainability comprised, if Greece passes review, if, if, if? @J_Dijsselbloem on flexibility for Greece on primary budget surplus
— Bruno Waterfield (@BrunoBrussels) February 24, 2015
09.51 Greece’s bail-out programme “has not failed” says Mr Dijsselbloem. The country has returned to growth, which has been temporarily derailed as a result of uncertainty around its elections, adds the president of the Eurogroup.
Mr Dijsselbloem repeats the mantra that Greece will be given “flexibility” in the bail-out programme.
09.50 Greece’s fiscal targets will be reviewed by the Commission to see whether they “remain reasonable and approproate” says Mr Dijsselbloem.
This is a key issue for the new government, who have demanded a relaxation of their budget surplus targets to carry out their election promises.
“If economic circumstances require, fiscal targets can be adjusted as they have been before” says the president of the Eurogroup.
“It cannot be a unilateral measure from the government to say we will not meet this target,” he adds.
09.44 Mr Dijsselbloem confirms the Eurogroup will have a teleconference later today to discuss Greece’s plans. He says this will mark a “first step” on the road to agreeing Greece’s extension.
09.40
1 On first read, Greek list of reform measures looks pretty good. Lots of stuff on combatting tax evasion, corruption, special privileges
— Hugo Dixon (@Hugodixon) February 24, 2015
2 No red rags from Greece either: eg minimum wage only raised over time in way that safeguards competitiveness, no privatisation rollback
— Hugo Dixon (@Hugodixon) February 24, 2015
3 even Greece’s humanitarian programme (eg food stamps) is supposed to have no negative fiscal effect
— Hugo Dixon (@Hugodixon) February 24, 2015
09.35 Zing
Dijsselbloem jokes that the only country that had a meeting to prepare for Grexit was….Britain #greece
— Emily Purser (@EmilyPurserSky) February 24, 2015
09.30 More comforting words from Mr Dijsselbloem, who says Grexit is not on the table.
That an a mea culpa from the president of the Eurogroup who says the delay came from finance ministers rather than the IMF.
Don’t blame the troika, blame the eurogroup, says @J_Dijsselbloem . No work prepared on #Grexit , he won’t contemplate it – leaves for Germans
— Bruno Waterfield (@BrunoBrussels) February 24, 2015
09.28 That list of Greek reforms dropped in Brussels’ inbox 45 minutes before the deadline, says the president of the Eurogroup
Greek list in at 23:15, new government ‘very serious’ about reform ‘need to see if still hits the targets’, says @J_Dijsselbloem
— Bruno Waterfield (@BrunoBrussels) February 24, 2015
09.17 Speaking in at his committee hearing today, Mr Dijsselbloem confirms that Greece’s letter arrived “just in time.”
MFAFA, unpronounceable so ‘agreement or programme’ says @J_Dijsselbloem
— Bruno Waterfield (@BrunoBrussels) February 24, 2015
09.16 Here’s what Greek stocks have done in response to today’s news that Athens and its creditors may have come to an agreement over its extension.
The Athens Stock Exchange rose as much as 7pc this morning, and are now trading 6.3pc up.
09.08 President of the Eurogroup Jeroen Dijsselbloem is speaking in front of a European Parliamentary Committee right now.
We’ll be bringing you the best of his comments.. You can it watch live HERE.
09.03 That letter from Wolfgang Schauble seems to have worked. The Bundestag will vote on Greece’s bail-out extension on Friday.
*GERMAN LAWMAKERS TO VOTE ON GREECE FRIDAY, GROSSE-BROEMER SAYS
— lemasabachthani (@lemasabachthani) February 24, 2015
08.55 So what exactly is in the list of proposals? A version of the letter has not yet been released, but speaking to CNN last night, finance minister Yanis Varoufakis said his government had drawn up plans to tackle tax evasion, corruption and alleviate poverty in the country.
A Greek government source said that the measures would include free electricity for 300,000 poor families, free access to health care, food and public transport coupons and aid for those on low pensions.
These make up the first pillar of Syriza’s Thessaloniki Programme to alleviate the country’s humanitarian problems and could amount to a spend of around €1.6bn.
According to Ambrose Evans-Pritchard, who is in Athens for the Telegraph, the letter will also state plans for the privatisation of Greek assets, such as its ports, and a crackdown on fuel smuggling.
Syriza are also likely to carry out plans to raise the country’s minimum wage but have not specified the precise amount.
Greece did not miss its deadline. The proposal was held up in Brussels. Whether this plan will really fly is a big question
— A Evans-Pritchard (@AmbroseEP) February 23, 2015
08.45 Greek markets have reacted positively to the news of the submission. Athens stock market is up 7pc already this morning, while the yields on Greek three-year debt have tumbled
Greek asssets rally. #Greece ‘s benchmark index ASE rose 6.50% after open, Greece’y 3yr yields drop 154bps to 13.5%.
— Holger Zschaepitz (@Schuldensuehner) February 24, 2015
08.38 Late last night, German daily Handelsblatt reported Germany’s finance minister Wolfgang Schauble had sent a four-page letter to his parliament, asking them to rubber stamp Greece’s reforms lists and allow for the bail-out extension.
That’s good news for Greece; Mr Schauble has been one of the most intransigent members of the eurozone’s financial men and rejected a Greek draft deal last week.
For any extension to be granted, the deal will need to be ratified by every eurozone parliament.
According to Handelsblatt, Mr Schauble’s letter read:
The Federal government advocates the proposed extension, against the background of Greece’s acknowledgment of its commitments and the agreement in the eurogroup.
08.33 After lots of confusion last night, spokeswoman for the Commission, Mina Andreeva confirmed that Greece did get its proposals in on time before yesterday’s midnight deadline.
List of reform measures of #Greek government received on time. @JunckerEU @EU_Commission
— Mina Andreeva (@Mina_Andreeva) February 24, 2015
08.30 Today’s prposals are a “valid starting point” for talks over Greece’s extended bail-out according to an European Commission source.
Reuters are reporting an EU source as saying:
“In the Commission’s view, this list is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review.”
“We are notably encouraged by the strong commitment to combat tax evasion and corruption.”
08.25 Last night Ambrose Evans-Pritchard reported that Greece’s left-wing Syriza government presented a five-page list of measures to EMU officials , just in time for their midnight deadline.
The stakes are high. Approval of the plans by its eurozone peers will give Greece four months breathing room to flesh out its financial reform agenda — but failure to reach an agreement will lead to yet another round of crisis talks, raising the specture of a Greek exit from the euro.
08.20 Hello and welcome to today’s live coverage of Greece’s latest round of talks with its creditors.
Despite some early optimism that today would be the day lenders would finally decide to grant a four-month bail-out extension to Athens, Monday ended with confusion over how far the government had met conditions to reform its economy to be granted the reprieve.
The Greek government has now submitted its reform proposals to Brussels, and we are likely to find out today if Syriza blueprint is deemed good enough.
The list will be reviewed by the eurozone’s finance ministers this morning, before being subject to the scrutiny of the Eurogroup later this afternoon.