Next Debt Relief Package for Greece Gets Green Light

A European finance ministers meeting this week approved a next tranche of debt relief measures for Greece worth 748 million euros after the country successfully implemented reform commitments despite the extraordinary circumstances posed by the coronavirus (Covid-19) outbreak.

This week’s Eurogroup discussed Greece’s progress in implementing reforms – agreed to when the country exited its last bailout in August 2018 – as well as its macro-economic outlook based on the sixth enhanced surveillance report published on 20 May, approving the next tranche of support.

“We commend the Greek authorities for the quick and decisive policy response, both in containing the outbreak of the [Covid-19] virus and in taking the necessary economic and fiscal support measures,” said the Eurogroup in a statement.

“We also welcome Greece’s commitment to undertake a set of additional reforms, with a view to supporting recovery.”

Photo Source: @European Parliament

The EU’s group of finance ministers said Greece had made progress in the privatization agenda, social welfare, labor market and public administration operation while acknowledging delays in the financial sector “due to operational constraints linked to the coronavirus epidemic”.

According to an updated forecast of European institutions, Greece’s primary balance is set to turn to a deficit in 2020, before returning to a surplus in 2021.

The Eurogroup noted that Greece must sustain and strengthen reform efforts to further support the economic recovery, improve the economy’s resilience and to move ahead with the execution of other key reforms, including enhancing tax administration, public investment, the business environment and implementing crucial financial sector reforms – which will be monitored under the next enhanced surveillance terms.

It also called on Greek authorities to proceed with the implementation of its arrears clearance plan and with the abolition of the current scheme for the protection of primary residences by the end of next month.

Athens, Greece

The Eurogroup will focus on Greece again in September following the seventh enhanced surveillance report.

European Economy Commissioner Paolo Gentiloni welcomed the agreement, adding that the 748-million-euro tranche will “help to sustain confidence at this crucial time”.

“The Greek authorities responded to the pandemic strongly. Nevertheless, the economic consequences for an economy with such a strong role for tourism, shipments and the transport sector will be important. The reaction to the pandemic was also coherent with a continued effort to sustain the reforms,” he added.