Eurogroup Statement

The statement from last night’s Eurogroup meeting is here.

The specific measures to be introduced now will attract some attention.

  • A lowering by 100bps in the interest rates on the Greek Loan Facility.
  • A lowering by 10bps in the guarantee paid by Greece for EFSF loans.
  • Term extension and interest deferral on EFSF loans
  • Recycling of SMP profits back to Greece.

Some assistance will also be provided to allow Greece to undertake some form of debt buyback.  More significant is the provision that:

Euro area Member States will consider further measures and assistance,…,in order to ensure that by the end of the IMF programme in 2016, Greece can reach a debt-to-GDP ratio in that year of 175% and in 2020 of 124% of GDP, and in 2022 a debt-to-GDP ratio substantially lower than 110%

The measures announced last night are, on their own, unlikely to push Greek debt down to 124% of GDP by 2020.  Even if the primary surplus set out as being a condition for the above commitment is achieved, the necessary nominal growth rates to reduce the debt ratio to the revised targets may not. 

Further measures will be necessary to ensure Greek debt sustainability, but the announced intention to do so means the odds on a Grexit will be lower after last night.

53 replies on “Eurogroup Statement”

Guardian summary here:

‘EU and IMF agree tentative deal to cut Greek debt’


“A source familiar with IMF thinking said the global lender was demanding immediate measures to cut Greece’s debt by 20 percentage points of GDP, with a commitment to do more to reduce the debt stock in a few years if Greece fulfils its programme.”

Good to see that kind of conditional thinking from the IMF.

Larry Elliot’s opinion.

“Most worryingly of all, the package does nothing to address Greece’s fundamental problem: the lack of growth. Past plans to make the country’s debts sustainable have foundered because a far too rosy view has been taken of Greece’s ability to cope with the austerity demanded by its creditors. This plan is no different.”

Merkel said a while ago that the Greek treatment should be so awful that no other country would want it.

Sado monetarism.

Well done to all the lads in the Eurogroup – sounds like they really cracked it this time!

The most depressing thing about all this is that it shows that the Eurogroup do not care in the least about genuine recovery in Greece. They are far happier to inflict another 10 or 20 years of suffering and depression on an EU member just so that craven politicans can hold their heads high and claim they have not reneged on promises.

If Greece had one decent leader he/she would spearhead political reform and lead the country out of the Euro, especially now that they almost have a primary surplus.

They can be no doubt that our fate will be similiar – there will be no meaningful debt relief and no recovery – just as long as we keep paying the bills the EU will continue to think we have a “well performing adjustment programme”.

@ All

With respect, why not hit the Google Translate button to the article in the Portuguese newspaper in the link above?

Juncker is reported as saying that, insofar as the EFSF is concerned, Portugal and Ireland will benefit from the same treatment as Greece and that the matter will be addressed at the next meeting of the Eurogroup.


100bps of the EFSF money and a ten year deferral of PN payments would be nice.
What is the betting that at some time in the near future, after a German GE and early ina new term the “loan to Greece” is quietly erased or restructured for another 40 years.
Who cares what your Debt/GDP ratio is when there are no repayments on a good portion of the debt.
In the absence of ability to repay and an unwillingness to mutualise the debts of the perihery or transfer money the solution is and always has been to fudge kick and obfuscate. The Germans quietly changed about 3 months ago and threw Jens under the bus where he belongs.

The European Investment Bank will make announcements of support in Dublin on Wednesday.

Senior representatives of Bord Gáis and AIB will be present.

Maybe some might sneer but nobody owes Ireland a living.

Quit the whining; The people who are best positioned to set the groundwork for sustainable growth are the Irish and the Greeks, not Germans or Finns.

There is great potential for Greece to improve its level of foreign direct investment (FDI) from the current abysmal situation. I know having worked with Greek colleagues in the Middle East that there are strong links with the Gulf oil producers.

As for Ireland, last Friday Richard Bruton issued a brochure on the Green Economy with the aspiration to create 10,000 jobs by 2015 — not serious stuff.

Jobs in high tech and life sciences have been static in the period 2002-2011.

Wonder why it was news only for Finfacts that patent applications at the Irish Patent Office in 2011 were at a 30-year low?

Wonder why in recent months The Irish Times has published several articles giving a platform to academics who fear losing public funding but as far as I know, none questioning a failed policy.

Batt O’Keeffe, former enterprise minister, had established a taskforce in 2010 to advise on research priorities. It recommended 14 areas in its report last March.

So if an eco system of vested interests in public and private sectors, an Oireachtas with no interest in holding beneficiaries to account and mainly cheerleading tech journalists, support ministerial delusion about a questionable policy that is at the heart of enterprise policy, why blame Germany?

Seamas, the LME on subordinated bank debt is quite important too, although not a lot of outstanding debt though.

The buyback terms that they mention are also important given where the debt trades currently.

Best, Samir


Your link re Juncker statement seems to merit the Google Translation.

“Juncker also ensures that Portugal will benefit from new rules on aid to Greece
November 27, 2012, 01:38 by Lusa |

The president of the Eurogroup said today at dawn in Brussels that the new rules agreed for the loan to Greece will be applied also for Portugal and Ireland, the other countries under financial assistance.

Speaking outside a meeting where the finance ministers of the euro zone agreed to extend the maturity of the EFSF loans to Greece in 15 years, Jean-Claude Juncker, under questioning by Portuguese journalists about whether Portugal can expect similar treatment, asserted that person will work on that to happen, as was previously agreed.

“We made the decision for months, or even more than a year, we have to apply the same rules to other countries under the program, and we will address this at the next meeting. If there is anyone in this room who is a friend of Portugal and Ireland that are part of my favorite countries in Europe, for obvious reasons, sentimental and personal, I am. Therefore, the subject will be treated so that neither Portugal nor Ireland is unhappy, “he said.

The same measures of Portugal is likely to benefit are then an extension of maturities of loans and a reduction in commissions paid by loans from the European Financial Stability Facility (Greece was granted a reduction of 10 basis points), because the other measures agreed Eurogroup to Athens refer to interest of bilateral loans (that Portugal does not qualify) and debt reduction.

The Eurogroup also decided that Portugal and Ireland will not participate in the reduction of interest rates charged on loans to Greece while receiving financial assistance.
If there is anyone in this room who is a friend of Portugal and Ireland, which are part of my favorite countries in Europe, for obvious reasons, sentimental and personal, I’m


The agreement on Greece includes a “decline of 100 basis points in interest rates imposed on loans to Greece” bilaterally.

The agreement also stipulates that Member States under the program, ie, Portugal and Ireland, “will not participate in cutting interest rates while receiving financial assistance.”

Portugal was represented at the Eurogroup meeting long – about 13 hours – by Finance Minister Vitor Gaspar, who did not speak to reporters.”

“Who cares what your Debt/GDP ratio is when there are no repayments on a good portion of the debt.”

The Fiscal treaty means that the Debt/GDP ratio really does matter and must be reduced according to the 1/20th rule.

“Quit the whining; The people who are best positioned to set the groundwork for sustainable growth are the Irish and the Greeks, not Germans or Finns.”

I agree with all the other points in your post, except for the above. It is naive to think that Greece or Ireland can grow at all under such a debt burden. If Ireland or Greece are pissing away 5-10% of GDP just in interest payments and inflation is kept below 2%, then there is 0 chance of any growth no matter what policies or “groundwork for sustainable growth” are put in place. There is absolutely no precedent for what you are suggesting.

Its interesting you mention Finland in your post. There is no way that Finland would be in the shape it is now if they had to deal with their banking and debt crisis in the 90s in the straitjacket that is the Eurozone. Only by devaluing and inflating away their crisis were they able grow again sustainably.

Much reform is need both in Ireland and Greece, but the debt problem is just not going to go away simply if we “quit the whining”.

I am particularly glad to see this bit.
“Recycling of SMP profits back to Greece.”

I have always considered it nothing other than straighforward theft, for the ECB to bank any profits made on buying country bonds.
If I recall correctly from other reading, Schaeuble was still holding out for the ECB to keep these ‘profits’ up to a few days ago.

@ Tull

difficult to ask for a cut in EFSF rates when its already passed through with no margin, no? Deferal of PN still has much more scope to help out if you actually look at the maths involved. I fully expect some idiotic and incorrect commentary both here and in the media about how any such PN deal is not helpful at all really, but getting a rate cut in our loans, ala Greece, would be….

This is consistent with the view that if countries go along with whatever the core think they should do in order to become more core-y then it will either ‘work’ and debt will be sustainable, economies reformed, or if it doesn’t, the core will accept gradual concessions to make the debt sustainable – and the economies are reformed anyway.

Until and unless either the politics in the periphery radicalizes, or the economomics runs away from the rolling EZ fudge, I imagine market boredom will continue.

Ireland will likely continue to resist real ‘reform’ / ‘Germanification’ because the establishment’s working assumption is that the “unique advantages” of the FDI wheeze and speaking English will provide superior GDP performance – so doing the minimum necessary will be the order of the day / decade.

@ bazza

I don’t disagree with you on the scenario one decade out or more. It’s just that it won’t likely be accepted as a basis for concessions now.

Europe will face a more challenging business environment than it does today while governments will be under pressure with increasing health and social costs.

Even today. some Irish people facing retirement have the worst payment situation in Western Europe. Why wouldn’t that get worse as the older population increases?

Today in the US, health care accounts for more than 17% of GDP.

Where is the Irish growth going to come from? The US Chamber of Commerce produces some data on FDI inflows but much of it relates to cash held by US companies to avoid US tax.

Why can’t we get a deal like Greece. They have already had one round of haircuts on bond holders – Now they are getting zero interest rates, extension in time to pay and a wad of cash –

Now if we were to get anything like that Id start to believe we had a finance minister that didn’t continually talk about “highly technical” discussions which yield nothing.

Ireland wants to drop all that drivel about being a special case and pay Greek ball.

@MHennigan RE the drop in Irish patents is indeed very worrying.

This is surely quite significant:
“Recycling of SMP profits back to Greece.”

Particularly if it also became the case for Ireland…

@ Hogan

“Particularly if it also became the case for Ireland…”

Will the coupon flows count as profit too, or just the redemption at par? From the looks of it, most Irish SMP bond purchases weren’t a million miles from par, so “capital” profit, so to speak, is minimal enough.

@ Jules

in return for this magnificent “deal” they have only had to suffer a near complete collapse in civil society, huge cuts to all sorts of social spending(multiples of the cuts seen here), and the tearing up of all pre-existing labour contracts (both public and private sector). Still wanna sign up?

@Bond. Eoin Bond

“in return for this magnificent “deal” they have only had to suffer…”

You are certainly correct in that. If one had to thread the path that was forced upon Greece before ‘relief’ was given, it would not be an attractive journey.


“in return for this magnificent deal….”

““This is not just about money,” Mr Juncker said. “It is the promise of a better future for the Greek people and for the euro area as a whole.”


“It is the promise of a better future for the Greek people and for the euro area as a whole.”

But first they must pass through the valley of the Golden Dawn

@ MH

“Today in the US, health care accounts for more than 17% of GDP”

That is fairly US specific. Related to rent seeking, corruption, political dysfunction. Not that they don’t exist on the other side of the pond but US
medicine is an example of system breakdown par excellence.


We may be in same state as Greece if there is a significant downturn in Global trade as multinational exports are really the only difference between Ireland and G. Also we have a higher deficit

Greece’s creditors offer the minimum
27 November 2012 To Vima Athens

After a series of tough negotiations, the agreement on reducing the Greek debt reached by the Eurogroup and the IMF allows about €44 billion in aid to be released and gives Athens a little breathing room, but does little to help the country in the longer term.

[…] Europe did not act with flexibility. It did not exceed the miserly, pessimistic, somewhat sordid approach of heartless accountants who cannot see beyond their own noses. It does not respect, as it should, the sacrifices of the Greek people.

Der Spiegel View
Bankruptcy Averted
Europe Agrees on New Aid Package For Greece
By Carsten Volkery in London

Euro-zone finance ministers finally reached a deal to avert a Greek bankruptcy on Monday night, agreeing to the release of the next installment of credit and launching a package of measures to reduce the country’s debt. But they shied away from a debt haircut, the only move that could solve the Greek dilemma in the long term.

Debt haircut would impact negatively on Angela’s re-election chances; hence, it did not happen. Disgraceful.

I was looking at the headlines of the articles I have read about Greece over the last few weeks

Greek elections: anger has given way to the politics of fear
Greek debt crisis: the agony of Athens
ECB issues warning to Greece
Greece now in ‘Great Depression’
Russia is not Greece
Buiter’s now predicting Grexit probability of 90%
Merkel, Hollande in talks on Greek debt
Eurozone demands six-day week for Greece
Greece is being blown away by the Brussels and Berlin blunderbuss
Benefiting from Greece’s brain drain
Northern Athens municipality suspends services due to lack of cash
alarm at Greek police ‘collusion’ with far-right Golden Dawn
Greek poverty so bad families ‘can no longer afford to bury their dead’
Time to decide whether Greece is in or out of the euro
Greece’s austerity: democracy tested to destruction
Claims of rising racism in Greece as young Egyptian tortured by employer

What a sad indictment of Europe


‘What a sad indictment of Europe

Bosnia;Greece; Latvia; ……………………………………

OrdoLiberals are a real and present threat to the European Project …. what would I not give for a few Irish StatesWomen ….

@ All

The article in Der Spiegel linked to by DOD gives the basics of the agreement, as far as I can see.

The first Greek bailout was agreed in bilateral deals and these establish no common standards, almost by definition.

The actions of the EFSF and the ECB, on the other hand, under the second bailout, are a kettle of different fish. These bodies cannot, again by definition, act in a discriminatory manner between participating countries, notably the ECB which is unequivocally governed by EU law.

The media coverage in Ireland during the course of the day is one of some confusion. Nothing new there!

@ Tull

I think that your basic analysis is correct. However, it seems to me that what is happening at present is the slow recovery by the countries of the EU of political trust in the intentions of others. To quote Benjamin Franklin, either they hang together or they will hang separately. They do not have to like one another.

Why is it that Germans learnt the inflation lesson from their calamity in the 20s, but not the – massive debt burdens are not a long term solution- lesson?

President Michael D. Higgins

A new wave of “independent thought” and “emancipatory scholarship” is needed to deliver Ireland’s recovery, President Michael D Higgins has said.

Speaking at his enrolment today as a member of the Royal Irish Academy, the President said public intellectuals faced “a moral choice – to be part of a passive consensus that accepts an insufficient and failed model of life and economy or to seek to recover the possibility of alternative futures”.

Calling for “vision, foresight and bold strategies”, he said: “In our current times our intellectuals are required to be brave; to have the courage of their convictions and to defend their conclusions; to speak truth to power and false inevitabilities…

“Independent thought, from home and abroad, and scholarly engagement with our current circumstances are crucial. We need a scholarship that is genuinely emancipatory, centred on originality rather than imitation: one that rejects the notion of inevitabilities supinely accepted; that restores the unity between the sciences and culture in their common human curiosity, discovery and celebration of the life of the mind; and that encourages and enables not only new visions to emerge, but new forms of inclusive, warm and celebratory forms of life to be experienced, in conditions of real freedom from the deprivation of the essentials of life, and the obstacles to participation in society.”


The Greeks are perhaps the only country to experience austerity as evidenced by a near 40% cut in the OAP. Here the previous govt just threatened to remove the medical card and the gray vote used their free travel passes to revolt. We have had ersatz austerity with soakage of the middle classes, cuts in the PCP and a light trim of the PS wage bill.
That said if we get a bank deal after only throwing a few home helps and some public sector contractors under the bus, the permo govt can be self satisfied.

Karl Whelan, in his article, has linked to a leaked draft of the EC commission report on Greece.
The executive summary gives a good feel for the destruction caused but also for the determination of the physicians to keep applying the poison.

But even the physicians are having doubts, as evidenced by comments like that below.
“Moreover, the impact on the weakened economy of the pronounced fiscal consolidation in 2013 may be stronger than currently foreseen” etc etc.

“Why is it that Germans learnt the inflation lesson from their calamity in the 20s, but not the – massive debt burdens are not a long term solution- lesson?”
Have you seen the debt levels Germans are comfortable with? Low, low, and low.

They don’t get into the position of being heavily indebted because it is very difficult to get out of that position.

In a foretaste of battles to come in the real economy, France is threatening to nationalise a steel mill.

China accounts for about 50% of global steel production.

Global steel has a big problem: It’s too big and it’s getting bigger according to The Wall Street Journal. This year, steel mills around the world have a production capacity of 1.8bn tons but will take orders for only 1.5bn tons. And instead of consolidating and becoming more efficient, the industry is building still more capacity. François Hollande, French president, on Tuesday at a meeting at the Élysée Palace, warned Lakshmi Mittal, the head of steel giant ArcelorMittal, that his French operations in Florange in the depressed region of Lorraine, Eastern France, face the prospect of nationalisation in an increasingly bitter dispute over job losses.

Boris Johnson, mayor of London, in New Delhi to drum up investment, took full advantage of the travails of Mittal, the billionaire native of India.

The OECD is optimistic about China’s growth. However, from what I heard last weekend, traders in Guangzhou in China’s industrial heartland, are slashing prices.

The planned shrine to Chinese commerce in Athlone is also floundering according to Shannonside radio. Desperate times but this was an absolutely daft project.

Maybe there’s an opening for a sequel to the 1985 movie ‘Ballinspittle’? (phonetically: Ballinaspittle).

Some of you may be interested in some good news:

German trade surplus to rise to €174bn in 2012 – – a 10% increase

President among his own at RIA ceremony

For once a Michael D Higgins speech laced with references to Immanuel Kant, Robert Mallet and Erwin Schrödinger received enthusiastic nods of recognition. At a ceremony to mark his joining of the Royal Irish Academy yesterday, the President knew he was very much among his own.

“Independent thought, from home and abroad, and scholarly engagement with our current circumstances are simply crucial,” he told the assembly of members gathered for what was a 227-year-old initiation ceremony.

@ Fiat

OECD figs i saw said +1.3% and +2.2% for Ireland, roughly similar to EU Commission. Think that article is referring to the “global economy”.

A la recherche du temps perdu en Grece

Why the Greek rescue isn’t going to plan
By Mohamed El-Erian
Published: April 7 2010

Ironically, the major issues in this complex case can be summarised by a relatively simple observation: that the solution to Greece’s problems is undermined by the inability of the major players credibly to commit to the required high level of co-ordination and trust. The Greek government is having difficulty convincing its people of the magnitude of the country’s problems and the required internal adjustments. As a result, Greece is unable to provide sufficient assurances to its creditors, thereby further complicating an already tough situation. This accentuates the hesitancy of exceptional financiers, such as Germany, who resist having to again pay the bill after others have partied. And without exceptional financing, the Greek government finds it even more difficult to embark on an adjustment program that relies on only one instrument – that of fiscal austerity.
It is a classic co-ordination failure in game theory. Any first mover will become worse off. Indeed, it is in the interest of any single party to wait for others to move first. As a result, no meaningful progress is made, the problems fester, and the risks of a disorderly outcome increase. Buoyed by a cyclical recovery, markets around the world have yet to recognise the complexity of this situation. When they do, it will also become apparent that Greece is part of a wider, and historically unfamiliar phenomenon – that of a simultaneous and large disruption to the balance sheet of many industrial countries. Tighten your seat belts.

Seafoid, there are probably some economists that still don’t understand that Mo’s observation below equally applies in a general sense to, and reveals the flaw in, “internal devaluation”. Real political leadership would be required to stop the “connected” and organised lobbies gaming the process and shove the likes of the carers and home helps to the front of the queue.

“It is a classic co-ordination failure in game theory. Any first mover will become worse off. Indeed, it is in the interest of any single party to wait for others to move first. As a result, no meaningful progress is made, the problems fester, and the risks of a disorderly outcome increase.”

Der Spiegel is getting noticeably tired of CDU spin recently ….

Finance Minister Wolfgang Schäuble insisted on Tuesday that the new deal aimed at slashing Greece’s debt load won’t cost German taxpayers. It will, however, deny Germany billions in expected revenues. And the feared debt cut may be just around a not-too-distant corner.

“The debt cut cannot be avoided,” said Frank-Walter Steinmeier, floor leader for the opposition Social Democrats. “It has merely been postponed to a period following the election.”


Bild are the ‘populists’ – they like to hammer the Greeks and the profligate Portugese Irish Spanish etc …..


But my understanding of what was the root cause of german inflation in the 20s/30s was WW1 reparations? i.e. a massive debt burden, from which the only options of escape are inflation caused by Seigniorage or default?

Dutch Prime Minister opposes concessions for Ireland and Portugal. He repeats Ollie’s infamous pacta sunt servanda.
How come pacta etc doesn’t apply to Greece.

Time for Michael Noonan to change tack on the Ireland is not Greece bit. We have a mountain of debt which continues to rise and, if the OECD are right, minimal growth for the next two years.

@ All


Right back where this thread started!

If even the Finns are conceding the point, it is a mystery why commentators in Ireland still seem unable to grasp the message conveyed by Juncker. Maybe it is that, having been disappointed on so many occasions, neither media – nor government – is easily convinced (and regard has to be had to the delicate political balance in German and other parliaments in getting the Greek package approved).

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