There is great anticipation for this afternoon's meeting in Brussels. It seems that an agreement will finally be reached to secure the 130 billion euro bailout package for the Greek government. The other three conditions, placed in Athens on 9 February have been met, so Europe must now deliver on its commitment. Today Prime Minister Lucas Papademos will present the latest measures found to raise the 325 million requested by the Troika (ECB, EU and IMF). Even the German Finance Minister, Wolfgang Schaeuble, always the most severe towards the Greek administration, he hinted that today could be the right time: "We are close to having a solid basis to make a decision on Monday". The European Commission is also confident, expecting “the Eurogroup to take all the decisions necessary for the second aid plan for Greece at this meeting”.
Sizes – So far it has been established that the Greek government will keep its commitments whatever the outcome of the elections called for April. At the request of the most intransigent countries (Germany, Finland and Holland), a guarantee fund was set up capable of covering debts for 9-12 months. Finally, as Prime Minister Papademos stated, Athens has “identified additional measures for a total of 125 million, thus arriving at the total of cuts of 325 million euros to the budget”. These reforms, which will be presented this afternoon, however, they foresee the much feared cuts in pensions which the Government had tried to avoid at all costs.
But the worsening economic situation, with the latest data not reassuring (a GDP in the last quarter of 2011 marked -7%), raise fears of the need to increase the rescue package. In the sustainability analysis presented to ministers, the Troika predicts that the 130 billion could prove insufficient to reach the target of a debt/GDP ratio of 120% in 2020, and that this value will be 129% of GDP in 2020. An extra 9% would cost between 25 and 30 billion euros. Among the solutions that are rumored, there is the hypothesis of an extension of the duration of the aid plan (but several countries are against it), an increase in the resources of the plan itself (we are talking about 136 billion euros), and a decrease in the interest rates paid by Athens for the first aid program of 110 billion euros (granted in May 2010 and of which 73 billion have been paid so far).
The good news is reaching an agreement with private creditors who have undertaken to launch a debt swap from 8 to 11 March. This agreement, which will involve a reduction of 100 billion in government debt burdens, will also have to be approved by today's Eurogroup.
Meantime in Athens, citizens' protests seem to have calmed down waiting for the decisions that will be taken this afternoon. Until this evening all of Europe will remain in suspense.
