By Christina Vasilaki (@christiva), TPP correspondent in Brussels
“The fourth evaluation is not progressing,” was the message from a Eurozone official shortly before the Eurogroup meeting on Monday. “The mission has been postponed a number of times and there is currently no plan to return, despite what we read daily in the Greek press. Discussions are ongoing between the Greek authorities and the Troika, but it is clear that without a deal we cannot have an in-depth discussion in the Eurogroup meeting on Monday. Everything depends on the progress made in discussions over the fiscal gap in 2014, the medium term plan and a series of structural reforms.” The official added that while there has still been no decision on whether a third programme would be necessary, at the end of the current evaluation, the member-states of the eurozone would give political guarantees to the IMF that the Greek programme will have sufficient funding for the next 12 months. (Greece’s second bailout programme from Eurozone members is due to end in the summer)
The European official did not fail to stress that the Greek government had nothing to gain from delaying the finalisation of the evaluation which cannot wait for the European elections. “There are no immediate funding needs for the next three months. However in May, two weeks before the elections, government bonds will expire and must be serviced. A deal must be struck much sooner than this in order for there to be enough time for the next tranche of bailout loans to be released. As is well known the process takes time.” The bonds in question, he explained, are held primarily by member-states of the eurozone and the ECB, while a small amount are held by hedge funds. “The next debt servicing will not come before the end of the summer.”
As far as the discussion regarding the viability of the debt, the high-ranking eurozone official repeated that first Eurostat must confirm in April the level of Greece’s primary budget surplus, after which a discussion would follow regarding alternative solutions.
With regards to the funding gap he said that the primary budget surplus that, according to the Greek government, has been achieved, was enough to meet current needs. As such there was no immediate fiscal problem regarding the functioning of the state.
When asked what he foresees after the end of the second bailout programme and whether there will be a third, (the European programme ends in July 2014 and the IMF’s at the end of the first trimester of 2016), the official said that everything will depend on the climate in the markets and on what funds are left over ‘in the bank’ from the previous programmes. As he stressed, “for Greece, as opposed to the other programme countries, the interest rates for borrowing are still very high.”
Finally, with regards to the payment of uniformed public workers (the Council of State recently ruled in Greece that pay-cuts imposed on the military, police, etc. are unconstitutional leaving the government facing a 400 million euro funding gap per year), the official said that alternate, fiscally equivalent measures have not been examined but that there was experience from similar decisions taken by the Constitutional Court in Portugal, and that he expected the issue to be resolved.