Patience for reforms has limits
The tolerance Greece’s creditors are showing in regard to the delays in the implementation of agreed reforms has an expiry date, though that has not yet been determined.
At Monday’s Eurogroup, which will discuss the seventh enhanced surveillance report on the Greek economy, the feedback to Athens will be “quite positive,” according to a senior eurozone official. He notes that Greece “has managed to register progress amid difficult conditions.” Public administration has been under pressure everywhere in Europe, he added, and the Greek authorities “have focused on tackling the consequences of the pandemic.” There will be “broad understanding” for that choice at the Eurogroup.
However, the same sources noted: “The significance of the underlying issues on which the reforms have been agreed remains in place. Greece will need to raise its efforts for the application of what it has agreed to.” Note that the seventh report is not associated with any new measures for easing Greece’s national debt, unlike the eighth, which will be released in November.
Regarding Greece’s decision not to utilize the resources from the Pandemic Crisis Support of the European Stability Mechanism (ESM), the eurozone official observed that “there is no obligation” for the use of that instrument and that the liquidity conditions of the Greek state are “very good.” He did add, though, that this tool remains available in case Greece or any other eurozone member needs it.
The agenda of the upcoming Eurogroup will also include the Recovery and Resilience Facility (RRF), the main instrument of the 750-billion-euro Next Generation EU fund. The finance ministers will discuss their priorities on reforms and investments to be funded by the RRF, based on their national recovery and resilience plans.
The eurozone official revealed there is a real dilemma between disbursing the resources rapidly and utilizing them efficiently for the realization of changes with positive medium-to-long-term effects on the economies of member-states.
