* Assumption Greece gets 2 more years to hit budget goals
* Debt sustainability analysis won't be ready for Monday
* Greece won't default on Nov. 16, to roll over T-bills
By Jan Strupczewski
BRUSSELS, Nov 12 - The euro zone will not
release a new loan tranche to Greece on Monday despite the
country's tough 2013 budget as there is no agreement yet on how
to make its debt sustainable, but Athens is set to get two more
years to cut debt, officials said.
Euro zone finance ministers, called the Eurogroup, meet on
Monday in Brussels where the main topic of their discussions
will be unfreezing lending to Greece, held up after Athens went
way off track with promised reforms and fiscal consolidation.
The Greek parliament passed an austerity budget for 2013
late on Sunday and a structural reform package on Wednesday to
meet conditions for the release of the next tranche of 31.5
billion euros of emergency loans from the euro zone.
But the ministers are not in a position to make a final
"There is a very, very high ... probability of a second
round of discussions to finalise everything," a senior EU
official said on Friday.
On Monday, the ministers will analyse all the reform
commitments Greece has made to judge whether an austerity
programme promised in exchange for the loans was back on track.
Key to a final agreement is an analysis of how to make Greek
debt, forecast to reach almost 190 percent of GDP next year,
sustainable again after the country's spendthrift ways started
the euro zone sovereign debt crisis in 2010.
European Central Bank Executive Board Member Joerg Asmussen
told Belgian daily De Tijd on Saturday Greece would fail to
reduce its debt burden to a manageable level by 2020 with
current policies, ending up with more than 140 percent of GDP
rather than the 116.5 percent agreed in March.
International lenders -- the International Monetary Fund,
the ECB and the European Commission, called the troika -- cannot
yet agree on a single estimate for Greek debt in 2020 or on the
best way to reduce it. Estimates between the institutions on the
debt in 2020 differ by 10-20 percentage points, officials say.
Once there is an agreement on the debt analysis, it will be
sent to national parliaments, notably in Germany, to get
approval for the disbursement of the next aid tranche -- money
Athens needs to pay off loans and shore up its banks.
TWO MORE YEARS
One thing the lenders do agree on now is that Greece, which
will see its sixth year of deep recession in 2013, needs at
least two more years to reach a primary budget surplus that
would put its debt on a downward path.
The extra time would allow the economy to start growing
again, otherwise it would never produce enough for the country
to repay its debt.
This surplus target was set in March at 4.5 percent of GDP
in 2014 and while there is no final decision yet, officials say
it is likely to be moved to 2016 because of delays with reforms
and a deeper than expected recession.
"The troika has been producing all of its reports and fiscal
analyses and adjustment paths on the basis of an additional two
years to reach a primary surplus of 4.5 percent of GDP," the
senior official said.
The extra time would mean the euro zone would have to
provide extra financing for Greece, which officials have put at
30 billion euros. This is politically difficult in Germany, the
Netherlands and Finland where public opinion is weary of
The two extra years would also mean that the targeted Greek
debt-to-GDP ratio, set by lenders in March at below 120 percent
in 2020, would be shifted to 2022, officials said.
Among the new instruments under consideration to reduce
Greek debt are the removal of the 150-basis-point interest above
financing costs on 53 billion euros of bilateral government
loans to Greece, and lengthening the maturity of the loans.
Greece may also borrow from the euro zone permanent bailout
fund to buy back its privately held debt, of which there is
50-60 billion euros, taking advantage of the deep discount it
traded at to save money on redemptions and interest payments.
The IMF has been pushing for governments to write off some
of the official loans to Greece, but Germany, the European
Commission and other officials have said it is not legally
Time pressure for a deal on Greece is growing because Athens
has to redeem 5 billion euros worth of treasury bills on Nov. 16
and has been counting on cash from the next euro zone aid
tranche to help cover that.
Since the money will not come in time, Greece wants to roll
over the bills. The senior EU official said euro zone ministers
were aware of the Nov. 16 Greek redemption and that there would
be no "accidental" default.
Greek Finance Minister Yannis Stournaras said on Friday the
country had no reason for worry.
"Greece is doing whatever it should be doing, and Europe is
doing what it should be doing... and the tranche will
(eventually) be released," he said. "On Monday, we are expecting
a political statement."