Greece’s government is adamant that much-needed reforms will soon be completed so that the country can unlock fresh funding from the European Union.
Greece, after a savage financial crisis that threatened the rest of the region in 2015, is no longer under a bailout program but as part of a deal it signed last year it needs to implement some new measures in exchange for some debt relief. This agreement says that Athens will receive the profits that regional central banks make when they Greek sovereign bonds — these are known as SMP-ANFA profits — and would allow the country to invest back into its economy.
However, European officials have previously told CNBC that the Greek government is behind schedule and is at risk of not getting this money next month, when euro zone finance ministers meet to decide on the disbursement.
However, Greece’s Finance Minister Euclid Tsakalotos told CNBC Wednesday that the reforms will be ready by March 11 and an upcoming report on Greece’s progress — which European creditors are preparing — will be positive.
“There’s still some (work) to be done to just pass legislation that has been agreed by the time of the Eurogroup (meeting of euro zone finance ministers) of (March 11). So the report will be favorable, it will say that we’ve done all this stuff. There are one or two things that have to pass through Parliament, but they are agreed legislation so it’s a formality till the 11th of March Eurogroup,” Tsakalotos told CNBC in Athens.
European creditors published an initial post-program report in November, stating there were “delays in the sixteen specific reform commitments due for end-2018.” These delays included arrears clearance, privatizations and the roll out of the primary health-care system.
Tsakalotos told CNBC Wednesday that the measures that still needed to be legislated are “leftovers” from Greece’s third bailout program, which ended six months ago.
The major issue, he said, is the protection of primary residences. This is a policy that was implemented during the euro zone debt crisis that suspended the seizure of primary homes for those who couldn’t repay their mortgages.
“Now we’re moving into a new system where people will be given support to be able to pay back their loans. So that’s good for the people that will turn loans that are not being paid into loans that are green loans (not potential defaults) … But it will also help the banks to clear up their non-performing loans.”
Athens doesn’t need fresh cash to stay afloat in the short term. Before ending its third bailout program in August, it received a cash buffer of about 25 billion euros ($28.3 billion) — which means that Greece wouldn’t necessarily need to tap the bond markets in the coming year unless it thinks there are favorable conditions to do so.
Getting the next set of funds is more than a question of money, it’s a question of credibility, Tsakalotos said.
“We don’t see it as only as an issue of whether we need the money. We see it as an issue that covers both the creditors and the institutions. We are confident that Greece is continuing on a reform strategy. So, it’s a signaling thing more than with the money thing.”