Greek parliamentarians have voted through an austerity package that keeps their hopes of securing a 130 billion euros bailout from the European Union and International Monetary Fund on track.
But more hurdles have to be cleared before loans start flowing, which are vital if Greece is to avoid a default in March when it faces 14.5 billion euros of bond repayments, a bill it cannot foot alone.
Following are the next steps in the process.
THIS WEEK:
– Having secured parliamentary approval against a backdrop of violent protest across Greece, Athens must now detail where it will find an extra 325 million euros of cuts demanded last week by euro zone finance ministers. It must produce written commitments from the main party leaders that they will stick to the programme before and after elections which could come as soon as April.
– If it delivers those two demands, euro zone finance ministers, the Eurogroup, will meet again on Wednesday. An "in principle" agreement to deliver the bailout could well come out of the meeting but until it is clear what proportion of Greece's private creditors will agree to take losses, the package cannot be finalised. "The Commission will seek a political signal at the Eurogroup that the programme is agreed," a European Commission source said.
– Negotiations will continue with private sector creditors over a bond swap to ease Greece's debt burden by cutting the real value of banks' and insurers' bond holdings by some 70 percent. Sources say the deal could be announced after Wednesday's euro zone ministerial meeting in Brussels. Greek Finance Minister Evangelos Venizelos has talked of a Feb. 17 deadline for agreement. Bondholders are likely to be given about two weeks to accept or reject the offer. A Greek government spokesman said the bond swap should be wrapped up in March.
– The other piece in the jigsaw is a debt sustainability report to be produced by the troika of EU, IMF and ECB inspectors looking at Athens' books. EU Economic and Monetary Affairs Commissioner Olli Rehn said the report should be finalised this week. Greece is expected to reduce its debt burden to 120 percent of GDP by 2020 as a condition of its second bailout, from around 160 percent now. But with the Greek recession deepening and reforms delayed, the IMF is concerned that target will be missed. The European Central Bank may help by agreeing to forego the profits on Greek government bonds it holds. ECB President Mario Draghi hinted at that last week but it will probably only come forward once all other elements are in place.
FEB. 20 – Further Eurogroup meeting of euro zone finance ministers.
FEB. 25 – G20 finance ministers and central bank chiefs meet in Mexico City (to Feb. 26). IMF head Christine Lagarde has said that if the euro zone bolsters its rescue funds she may be able to seek more crisis-fighting ammunition for the International Monetary Fund. If that happens, there would be a stronger firewall to protect against contagion from a chaotic Greek default, although probably not until the second half of the year. This meeting will come too early for definitive decisions but the issue will likely dominate discussions.
FEB. 27 – The Bundestag, the lower house of the German parliament, will hold a special session to discuss the Greek rescue plan. Other national parliaments may have to vote on the package before actively supporting it. A European Commission source said it would seek a clear calendar from the Dutch, the Finnish and the Germans for political ratification of the deal.
MARCH 1/2 – EU leaders summit. This could be the moment when the deal is finally completed. EU diplomats talk of wanting to see early action on cutting the minimum wage, recapitalising Greek banks and labour market reforms to help EU heads of government sign off on the bailout.
MARCH 12 – Eurogroup meeting.
MARCH 20 – Greece must pay 14.5 billion euros in bond redemptions.
