Euro zone to move on unfreezing Greek aid on Tue

BERLIN Mon Nov 19, 2012 10:11pm IST

The logo of the European Union and the word crisis are displayed on the screen an iPad and a LCD monitor in Zenica November 16, 2012. REUTERS/Dado Ruvic

The logo of the European Union and the word crisis are displayed on the screen an iPad and a LCD monitor in Zenica November 16, 2012.

Credit: Reuters/Dado Ruvic

Related Topics

Border Security Force (BSF) soldiers ride their camels as they rehearse for the "Beating the Retreat" ceremony in New Delhi January 27, 2015. REUTERS/Ahmad Masood

"Beating The Retreat" Rehearsals

Rehearsals are on for "Beating the Retreat" ceremony which symbolises retreat after a day on the battlefield, and marks the official end of the Republic Day celebrations.  Slideshow 

BERLIN (Reuters) - Euro zone finance ministers will give a tentative go-ahead for the disbursement of 44 billion euros in emergency loans to Greece on Tuesday, but the money will only be paid on December 5 if the country meets all remaining conditions.

Officials familiar with preparations for the finance ministers' meeting expect a "political endorsement in principle" on unfreezing loans to Athens, along with a discussion on how to reduce Greek debt and provide two extra years of external financing to allow the country to meet its fiscal targets.

Greece must also show that it has fully committed to a detailed package of economic reforms, called "prior actions", before any further emergency loans can be paid out.

Once ministers have given their political endorsement, proposals on how to cut Greek debt and provide additional financing can be sent to national parliaments for approval, a step that is expected to be completed by November 30.

This will give Athens time to complete the few outstanding "prior actions". International lenders will check if the remaining reforms are in place on November 28 and euro zone finance ministers will make the final decision to pay the next tranche to Athens on December 3, according to the schedule seen by Reuters.

Greece and the European Commission would sign a revised memorandum of understanding on December 4 and Greece would get the money on Dec 5, according to a timeline of decisions on Greece agreed by the euro zone, seen by Reuters.

GREECE ON TRACK TO MEET ALL CONDITIONS

One of the key conditions for Germany for the resumption of lending to Greece, which was stopped after Athens fell far behind reforms and fiscal consolidation earlier this year, was that the loans would be paid to a special escrow account to make sure it would first be used to pay off Greek debt.

Greece appeared to meet that condition on Monday when Athens decided that privatisation revenues will be paid within 10 days into a special escrow account held at the central bank.

Asked about Greek declarations that the government has completed all the major steps required of them at this stage, a senior euro zone official said: "They have done so, and two small items remain to be done before disbursement."

The escrow account was set up under the country's second bailout deal with the European Union and International Monetary Fund last March.

In addition, Greece decided that public sector budgets would be monitored on a quarterly basis and if targets were missed, automatic spending cuts or tax hikes would kick in.

If fiscal targets are missed by more than 10 percent for two consecutive quarters and no corrective action is taken, the finance minister would appoint an administrator to oversee spending by the division missing the target.

From 2014 onwards, public sector entities would borrow for investment purposes only, subject to the finance minister's approval.

A second decree on further reforms has yet to be published, including a move to reduce the pay packages of parliamentary workers, bringing them into line with other public employees.

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Reuters Showcase

Vodafone Ruling

Vodafone Ruling

Government will not appeal Vodafone tax ruling   Full Article 

Indian Railways

Indian Railways

Private refiners compete with state firm to sell diesel to railways   Full Article 

Ranbaxy Results

Ranbaxy Results

Dec-quarter net loss widens on forex loss  Full Article 

Market Eye

Market Eye

Sensex, Nifty retreat from record highs on profit-taking.  Full Article 

Tech Talk

Tech Talk

Apple takes high road in China smartphone standoff with Xiaomi.  Full Article 

Business Strategy

Business Strategy

Uber scraps commissions for its New Delhi taxis.  Full Article 

Job Cuts

Job Cuts

Sony to cut 1,000 jobs in smartphone business - sources.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage