Greek government’s post-Eurogroup nonpaper

Shortly after the Eurogroup meeting, the Greek government released a non-paper (labeled as an “Informal Briefing”) imprinting the atmosphere of the Eurogroup talks, as well as the steps forward with the new ESM agreement. The nonpaper is interesting, as it shows an evident change in rhetoric from the one utilized up until now by the Syriza-led government.

You can find the original (in Greek), here. Below, you can read my own (quick) translation of the non-paper.


Agreement between Greece – ESM for a three-year program

  1. The Eurogroup meeting was held in a constructive atmosphere, the efforts of the government were positively evaluated and, from now on, the Greek government is in agreement with the ESM for a three-year program. The aim of the program is the return to growth and tackling the problems of the Greek economy.
  1. At the Eurogroup meeting, the agreement of the 12th of July was reaffirmed, and the Ministers of Finance are ready to take actions, such as longer periods of repayments, in order to ensure the sustainability of the Greek debt. In this way, the IMF will [too] participate in the program, [something] which the Eurogroup deems necessary. The actions that will ensure the sustainability of the Greek debt will depend on the implementation of the program and will be determined after the first assessment [October 2015].
  1. The low primary surpluses remain, as they were agreed in Athens. These are -0.25% for 2015, +0.5% for 2016, +1.75% for 2017 and +3.5% for 2018.
  1. The Eurogroup has decided that the total amount of the program will be up to 86 billion Euros. In this figure, [up to] 25 billion Euros for the banks are included.
  1. The first tranche of the program will be 26 billion euros and will be given in two sub-tranches:
  2. a. The first sub-tranche will be 10 billion Euros and will be paid directly for the recapitalization of the banks, while
  3. The second sub-tranche will be 16 billion Euros and will be paid in installments to Greece. The first payment of 13 billion Euros will happen until the 20th of August. The remaining amount [3 billion Euros] will be paid in one or more installments, in autumn, provided that the prerequisite measures are implemented.
  1. The second tranche for the banks will be up to 15 billion Euros, depending on the needs that will arise from the stress tests of the banks. The amount will be paid after the first assessment, that is, after the stress tests are completed, and in any case, after the 15th of November.
  1. The Eurogroup ruled out a bail-in for depositors, regardless of amount. The Eurogroup does not rule out the participation of bondholders in the recapitalization of the banks, a decision that will be taken after the completion of the stress tests of the banks, in mid-October.
  1. The Eurogroup agrees with the creation of a new, independent Fund for the development of public property. The valuation of the assets will be made in a way that ensures that the price reflects the actual value of the assets. The law should be voted until the end of October 2015, in order for the new Fund to become operational starting on late 2015. This is a state-run investment Fund, with completely different functionality and logic from the HRADF, in which the public assets and the shares of the Greek banks after their recapitalization will fall into. The aim of the Fund is 50 billion Euros in revenue, out of which 25 billion Euros will cover the recapitalization of the banks, while the remaining 25 billion Euros will be used by 50% for the debt [12.5 billion Euros]. The different aim of the Fund is evident, since with the HRADF, the proceeds from privatizations went entirely towards the repayment of the debt.
  1. The announcement of the Eurogroup also states the key measures that will be included in the agreement that was voted this Friday morning in the [Greek] parliament. Specifically, addressing tax evasion, reforming the pension system with the purpose of enhancing its sustainability and effectiveness, strengthening investments, modernizing the public sector, reforming the labour market and market of goods, addressing the “red loans”, [and] the possibility of creating a “bad bank”, while it is also possible for changes to occur in “Katseli’s Law”, following technical processing.

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