Greece’s exit from supervision with a ‘bonus’

By Tasos Dasopoulos

Greece is now entering the final stretch for the exit to the status of enhanced supervision, with the closing of the 13th evaluation next Tuesday and Wednesday with the final contacts that the financial staff will have, with the heads of the groups of the institutions.

From the long-distance contacts that preceded the technical steps, it seems that Greece will continue to have open issues, which derive their origin from the third memorandum and after the end of the period of enhanced supervision. The representatives of the institutions consider that issues such as the granting of pensions that are delayed for years, will not be completed until the middle of the year, despite the assurances of the Ministry of Labor to the contrary.

Also, the establishment of a stable mechanism, which will not only repay debts to individuals, but also prevent the accumulation of new debts, will also take time. The same goes for the trial of the 35,000 cases pending in the courts, under the old Katselis law.

The latest constant pressure from the institutions is the “thawing” of the approximately 40,000 auctions, which had stopped due to the pandemic, with the suspension of the operation of justice. However, there is satisfaction with the establishment and operation of the law on out-of-court settlement of debts and the provision of a second chance, which is the first complete solution for the settlement of private debt after years. The new regime is much better and more transparent than the Katselis law, considered its predecessor.

The prospect of reducing non-performing loans to single digits by the end of the year, through the two phases of the Hercules program and the start of the HFSF disinvestment process by commercial banks was, according to the institutions, another very positive element, during the ratings. .

However, the continuation of basic reforms during the months of the pandemic gives Greece an alibi in the eyes of the institutions for the delays in key commitments, but also individual changes in health, education and justice. All these reasons will make the European Commission suggest next July, the exit of Greece from the enhanced supervision.

The double dose

Along with the approval of Greece’s exit from the enhanced supervision, the Commission will also suggest the “repayment” of the two installments due to Greece from the bond profits still held by the ECB and the other Central Banks. The double installment results from the delayed first installment, which should normally have been given in the summer of 2019 but was postponed due to the general election and the last installment, which would otherwise have come in mid-2022, with the end of enhanced surveillance.

In total, the two installments add up to an amount of approximately 1.5 billion euros, which includes the indirect profit from the suspension of the interest rate penalty that Greece would normally pay until now for a loan of 12 billion euros, which was made in 2012 for early repayment of expensive debt immediately after the completion of the PSI.

The Minister of Finance has already sent the relevant letter for the termination of the enhanced supervision regime to Mr. Gentiloni, who in due course will inform all five states that will have to activate parliamentary process, on the issue of Greece. Germany, the Netherlands, Austria, Finland and Slovakia will have to approve in their parliaments the termination of enhanced supervision and the double installment of bond profits.