The three financially assisted countries in exchange for implementing an economic programme designed by the Troika of the European Commission, the European Central Bank and the IMF are playing the leading role in the informal Eurogroup.
Dublin will presumably get the green light from its European partners to pay back early the International Monetary Fund’s part of its bailout. An EU official with access to the negotiation room explained to The Corner that the former ‘Celtic tiger’ has economic room to pursue that.
“There’s no legal or economic implications in paying back the loans early… It’s good for the Irish sovereign and for the Eurogroup,” he said.
Ireland received €22 billion in 2010 and will save a huge amount of money leaving the assistance program: the cost of repaying the IMF carries a 5% interest is considerable higher than borrowing from the European Union and from markets at less than 2%.
For Greece and Cyprus, with both their external programs still in place, the situation is quite different. Both Mediterranean countries are on the fifth review of their rescues. Greece hopes to not receive more foreign money and to put an end to this deleverage in October. Then there would be an assessment about how to deal with the helenic debt and its sostenibility. But as an EU official puts it, the future is open.
“We have to take a look to the debt evolution last figures to put it on track for 2020 but what’s going to happen after this review I don’t know”, he explained, revealing the intentions of the Greek government. “They don’t expect any new program, which means the country would get funding in the markets on its own but we are open to all scenarios,” he pointed out on Wednesday.
In the case of Cyprus, the EU and the IFM will transfer the new package as long as the goverment accomplishes with its international obligations. But Nicosia hasn’t already sent any official comunication to Brussels about its last reforms. The island cannot expect any flexibility in the fiscal schedule and has to follow the austerity path.
“The Americans first put money into the economy, then fixed their banks. The Europeans began to consolidate and, in the end, did the rest. This is not in the right order,” believes London School of Economics professor Iain Begg, who thinks that despite the new economic scenario the EU is repeating the same mistakes.