Athens Digest 22.02.2019

• Banks, government hammer out details of new insolvency rules

• Tsakalotos upbeat on SMP-ANFA payout

• Lower primary surplus targets? A Dutch ‘no’ on the table

• Still a hugr gap to bridge. Greeks’ trust in EU lower than in pre-Brexit UK


# Government officials last night said they agreed with bankers over the final details of a new household insolvency regulations. Nevertheless, the institutions will have to assess the new proposal and give their green light. A Bank CEOs and senior executives met with top aides of Prime Minister Tsipras for more than three hours, with discussions largely focused on potential loopholes in the protection system that could create a new class of strategic defaulter.

# A potential “yes” by the institutions until Monday will be welcomed as the agreement will be included in the February 27 release of the Commission’s enhanced surveillance report. In any case, an agreement on the new scheme should be reached ahead of the March 11 eurogroup meeting. On Wednesday, Athens is also awaiting a second Commission report on the macroeconomic imbalance procedure which is expected to highlight “excessive imbalances” for the Greek economy. Meanwhile, the Eurozone bailout fund ESM announced that former EU finance commissioner Joaquin Almunia will head the fund’s evaluation of financial assistance to Greece.

# Tsakalotos says Greece will overcome delays in implementing reforms and qualify for a debt-relief payout next month. Speaking to CNBC, the finance minister said a catch-up timetable would deliver a positive report on February 27 and Eurogroup assessment on March 11 to start payouts from Greek bond profits held in an ECB kitty worth EUR 4.8 billion. “There’s still some (work) to be done to just pass legislation that has been agreed … The report will be favourable, it will say that we’ve done all this stuff,” Tsakalotos said. A good report card from lenders also factors into plans to return to markets with a 10-year-bond issue. Ratings agency Fitch held Greece’s rating at BB- arguing that its strong budget performance was offset by the “extremely high level” of NPLs. Tsakalotos also said he was supportive of a call by Greek conservative opposition leader Kyriakos Mitsotakis to try and lower high primary surplus targets demanded by creditors, adding he would back such an initiative.

# At this point, a revision of the primary surplus targets is not on the table of the negotiation with creditors. But, in Athens, last Wednesday, the Dutch Ambassador preferred to be clear. “Recently, there have been suggestions that Greece might be able to renegotiate its fiscal targets … Let me be open and honest about it: I do not see scope for changing agreements that have been made on this matter, and neither does my government,” Ambassador Caspar Veldkamp told the Hellenic-Dutch Commerce Association. Greece, he argued, needed to continue the fight to improve competitiveness. “For example, Greece scores only 72nd in the most recent Doing Business Index … This is not good enough for a country in the Eurozone … Greece can and should do better.”



On our Radar: Trust at trough level
In the year Britain is due to leave the EU, trust in the bloc among its citizens remains at just 31 percent. But there is a member where the level is even lower: Greece. In its latest survey of EU citizens’ attitudes, the Eurobarometer found that just 26 percent of Greeks trust the EU, and 70 percent distrust the union. Greeks also lagged other members when asked if they thought their “voice counts” in the EU _ 79 percent said ‘no.’ And on the “Current state of the national economy” _ 94 percent replied they thought it was ‘bad.’ More than 50 percent of those polled in every country _ including the UK _ felt like a citizen of the EU. But Greece had the second lowest score at 52 percent (Bulgaria was the lowest at 51 percent).