June target for enhanced surveillance exit

The government may find out this month when Greece will emerge from the enhanced surveillance framework which serves to ensure continued support for the delivery of reform commitments following the end of the financial assistance program in 2018. This follows discussions in the context of the 13th post-bailout assessment that has just begun in Athens on a staff level and will continue on January 25 with the mission chiefs.

Sources say the government will seek to close that chapter as early as possible, likely in June, as originally provided for by the June 2018 Eurogroup decision that brought the bailout period to a close. Ideally Athens would have the last couple of tranches of European central banks’ earnings from Greek bond holdings (SMP/ANFA) disbursed simultaneously: This concerns the scheduled final tranche of this summer plus that pending since 2019, postponed due to the elections and the delay in the main residence protection reform.

The double disbursement would constitute a significant boost for state coffers, by more than 1.5 billion euros; it would also be of great symbolic value, as the country would cease to be the only one still under enhanced surveillance, reverting to normal surveillance, as is the case with the rest of the countries to have received bailouts (Cyprus, Portugal and Ireland), until it pays off 75% of its loans.

The intentions of the Europeans are not yet clear, especially those of the European Commission, which will be the one to recommend Greece’s exit from enhanced surveillance. The 2018 decision set out the disbursement timetable for the SMP/ANFA holdings, the last tranche being due this June, but that does not mean the enhanced surveillance must end then. Sources in Brussels say that depends on whether the Commission is satisfied with the completion of the country’s obligations.

In fact the milestone requirements have been quite heavy and no one can claim they have been implemented in their entirety, nor that that will happen by June. Still, the Greek side argues there has been major progress, the country has shown considerable improvement in key indexes, and it has fostered more reforms than any other amid the pandemic. In any case, government officials will argue, Greece has already approached its milestones.