The Eurogroup welcomes the agreement reached with the Greek government on a policy
package that constitutes the basis for the successor programme. We also welcome the
approval of the policy package by the Greek parliament, the identification of additional
structural expenditure reductions of € 325 million to close the fiscal gap in 2012 and the
provision of assurances by the leaders of the two coalition parties regarding the
implementation of the programme beyond the forthcoming general elections.
This new programme provides a comprehensive blueprint for putting the public finances and
the economy of Greece back on a sustainable footing and hence for safeguarding financial
stability in Greece and in the euro area as a whole.
The Eurogroup is fully aware of the significant efforts already made by the Greek citizens but
also underlines that further major efforts by the Greek society are needed to return the
economy to a sustainable growth path.
Ensuring debt sustainability and restoring competiveness are the main goals of the new
programme. Its success hinges critically on its thorough implementation by Greece. This
implies that Greece must achieve the ambitious but realistic fiscal consolidation targets so as
to return to a primary surplus as from 2013, carry out fully the privatisation plans and
implement the bold structural reform agenda, in both the labour market and product and
service markets, in order to promote competitiveness, employment and sustainable growth.
To this end, we deem essential a further strengthening of Greece's institutional capacity. We
therefore invite the Commission to significantly strengthen its Task Force for Greece, in
particular through an enhanced and permanent presence on the ground in Greece, in order to
bolster its capacity to provide and coordinate technical assistance. Euro area Member States
stand ready to provide experts to be integrated into the Task Force. The Eurogroup also
welcomes the stronger on site-monitoring capacity by the Commission to work in close and
continuous cooperation with the Greek government in order to assist the Troika in assessing
the conformity of measures that will be taken by the Greek government, thereby ensuring the
timely and full implementation of the programme. The Eurogroup also welcomes Greece's
intention to put in place a mechanism that allows better tracing and monitoring of the official
borrowing and internally-generated funds destined to service Greece's debt by, under
monitoring of the troika, paying an amount corresponding to the coming quarter's debt service
directly to a segregated account of Greece's paying agent. Finally, the Eurogroup in this
context welcomes the intention of the Greek authorities to introduce over the next two months
in the Greek legal framework a provision ensuring that priority is granted to debt servicing
payments. This provision will be introduced in the Greek constitution as soon as possible. The Eurogroup acknowledges the common understanding that has been reached between the
Greek authorities and the private sector on the general terms of the PSI exchange offer,
covering all private sector bondholders. This common understanding provides for a nominal
haircut amounting to 53.5%. The Eurogroup considers that this agreement constitutes an
appropriate basis for launching the invitation for the exchange to holders of Greek
government bonds (PSI). A successful PSI operation is a necessary condition for a successor
programme. The Eurogroup looks forward to a high participation of private creditors in the
debt exchange, which should deliver a significant positive contribution to Greece's debt
The Eurogroup considers that the necessary elements are now in place for Member States to
carry out the relevant national procedures to allow for the provision by EFSF of (i) a buy back
scheme for Greek marketable debt instruments for Eurosystem monetary policy operations,
(ii) the euro area's contribution to the PSI exercise, (iii) the repayment of accrued interest on
Greek government bonds, and (iv) the residual (post PSI) financing for the second Greek
adjustment programme, including the necessary financing for recapitalisation of Greek banks
in case of financial stability concerns.
The Eurogroup takes note that the Eurosystem (ECB and NCBs) holdings of Greek
government bonds have been held for public policy purposes. The Eurogroup takes note that
the income generated by the Eurosystem holdings of Greek Government bonds will contribute
to the profit of the ECB and of the NCBs. The ECB’s profit will be disbursed to the NCBs, in
line with the ECB’s statutory profit distribution rules. The NCBs’ profits will be disbursed to
euro area Member States in line with the NCBs’ statutory profit distribution rules.
• The Eurogroup has agreed that certain government revenues that emanate from the SMP
profits disbursed by NCBs may be allocated by Member States to further improving the
sustainability of Greece's public debt. All Member States have agreed to an additional
retroactive lowering of the interest rates of the Greek Loan Facility so that the margin
amounts to 150 basis points. There will be no additional compensation for higher funding
costs. This will bring down the debt-to-GDP ratio in 2020 by 2.8pp and lower financing
needs by around 1.4 bn euro over the programme period. National procedures for the
ratification of this amendment to the Greek Loan Facility Agreement need to be urgently
initiated so that it can enter into force as soon as possible.
• Furthermore, governments of Member States where central banks currently hold Greek
government bonds in their investment portfolio commit to pass on to Greece an amount
equal to any future income accruing to their national central bank stemming from this
portfolio until 2020. These income flows would be expected to help reducing the Greek
debt ratio by 1.8pp by 2020 and are estimated to lower the financing needs over the
programme period by approximately 1.8 bn euro. The respective contributions from the private and the official sector should ensure that
Greece's public debt ratio is brought on a downward path reaching 120.5% of GDP by 2020.
On this basis, and provided policy conditionality under the programme is met on an ongoing
basis, the Eurogroup confirms that euro area Member States stand ready to provide, through
the EFSF and with the expectation that the IMF will make a significant contribution,
additional official programme of up to 130 bn euro until 2014.
It is understood that the disbursements for the PSI operation and the final decision to approve
the guarantees for the second programme are subject to a successful PSI operation and
confirmation, by the Eurogroup on the basis of an assessment by the Troika, of the legal
implementation by Greece of the agreed prior actions. The official sector will decide on the
precise amount of financial assistance to be provided in the context of the second Greek
programme in early March, once the results of PSI are known and the prior actions have been
We reiterate our commitment to provide adequate support to Greece during the life of the
programme and beyond until it has regained market access, provided that Greece fully
complies with the requirements and objectives of the adjustment programme.