Greece sees no need for precautionary credit line to exit bailout

Greece does not expect it will need a precautionary credit line when it exits its bailout next year, a view that is in line with its official creditors, the finance minister said on Friday after a meeting of euro zone ministers in Tallinn.

Greece’s 86-billion-euro bailout programme, its third since 2010 when its debt crisis exploded, ends in August next year and by then Athens aims to have fully returned to market financing.

“It is pretty clear that the Greek government, the European institutions and the IMF are not thinking of a precautionary credit line, there is no reason for it,” Euclid Tsakalotos told reporters.

He said that based on a Eurogroup decision in June, Greece should have a buffer of funds to ensure a clean exit from the bailout programme and to pay down state arrears. The money will likely come from bailout funds that will be left unused.

“What emerges from the Eurogroup’s statement in June is that we may get part of these funds to form a buffer and pay down state arrears. This is a discussion that will take place between February and May, not now,” he said.

Tsakalotos echoed European Central Bank Executive Board member Benoit Coeure, who said he saw no need to conduct an asset quality review (AQR) at Greek banks as a broader European Union-wide stress test is already being planned for 2018.

“The Greek case is simple, Greek banks are part of the European system. We have the European authorities, the ECB and the SSM (Single Supervisory Mechanism), neither of which is asking for an asset quality review,” Tsakalotos said.

The minister said that Greek banks will take part in the pan-European stress test next year and projected that economic recovery in the next two years will help lenders reduce their high level of non-performing loans.
Source: Reuters (Reporting by George Georgiopoulos; Editing by Angus MacSwan)

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