LONDON (Reuters) - Jeroen Dijsselbloem, head of the Eurogroup of finance ministers, expects Greece’s spending cuts and reforms plans to be finalised by the group’s May 24 summit, so talks can start about what is likely to be a three-staged debt relief program.
Dijsselbloem told Reuters in an interview on Thursday that talks about Greece between the euro zone’s finance ministers had gone refreshingly smoothly on Monday, after what had been some ominous pre-meeting noises from Germany and the International Monetary Fund.
He is now hoping Athens can finalize its spending cuts, privatization and reform plans in time for the next round of discussions on May 24 to keep the momentum going.
“So I’d like in the next Eurogroup to have a full and formal agreement on everything,” he said on the sidelines of the European Bank for Reconstruction and Development’s annual meeting.
He said he wanted final details on pension reforms, tax reforms, a privatization fund and contingency mechanism “done and dusted” by the next meeting.
The issue of providing further debt relief remains a sensitive issue both within the euro zone and for the IMF, which says that without major cuts Greece’s debt levels will remain unsustainable.
Dijsselbloem said that Greece needed immediate help to get the ball rolling but also a roadmap for further possible assistance both when its aid package ends in just over 2 years time, and for if it stays on track further down the line.
“The way forward I propose is that we look at what we can do in the short term, what can we do to reprofile debt, phase out some expense loans quicker and replace them with cheap loans.”
“Second what can we do at the end of the program. Third, long term, how can we guarantee everything stays on track in the coming decades. Of course that is much more difficult.”
The Dutchman declined to detail exactly how the debt relief could eventually look.
Among issues sources have said could be employed are lengthening both the grace periods and final payments of loans, taking more profits from Greek bonds the European Central Bank bought at the height of the debt crisis, and effectively funding debt swaps by the European Stability Mechanism.
“The good thing about the Eurogroup meeting was that there were very (few) red lines, very little no-gos. The only big no-go is the nominal haircut (writedown of debt),” Dijsselbloem said.
“We should have the discussion now about what we should do in 2018 if Greece fully complies with the program. So a semi-automatic trigger moment.”
“I would rather discuss that now and give some clarity than have to have this uncertainty for the next 3 years.”
Editing by Jeremy Gaunt