MNIMONIO

New Agreement? YES, please…

kolotoumba, Leave a comment

 

Well, we have been living in a roller-coaster since PM Tsipras announced his intention to have Greek voters decide if they approve or reject a bail-out agreement issued (and then retracted) by the President of the European Commission Jean-Claude Juncker.

The NO vote won by an overwhelming 61% despite the calls of many former state and EU leaders and people of intellect who had warned that a NO vote would be interpreted as a NO TO EURO and/or NO TO EUROPE vote.

The past three days have seen the resignation of Ministry of Finance Varoufakis, the gathering and consensus  of the leaders of five parties of the parliament for an Agreement with Greece’s debtors and finally TODAY, an official request for a “stability support” based on the ESM mechanisms. In other words, Greece is requesting a new LOAN AGREEMENT a new MEMORANDUM OF UNDERSTANDING, a new MNIMONIO, or what have you.

ESM Application

 

So NO won but all actions that have taken place are as if the YES won…

May this be the KOLOTOUMBA GRANDE which this blog has been wishing for?  IT BETTER BE!

Fingers are crossed that

  • The INSTITUTIONS will agree
  • Greek political parties will provide a vote of confidence
  • In the meantime, a GRAccident/GRExit will not nullify the ESM application
New Agreement? YES, please…

Yes, Master FAFA

kolotoumba, , , 5 Comments

According to the man, Jeroen Dijsselbloem,  himself:

@J_Dijsselbloem
“Received Greek request for six months extension”

The actual text has been reported by @Reuters as well: http://www.reuters.com/article/2015/02/19/eurozone-greece-request-idUSL5N0VT2S720150219

Yanis Varoufakis, Minister of Finance:

In this context, the Greek authorities are now applying for the extension of the Master Financial Assistance Facility Agreement for a period of six months from its termination during which period we shall proceed jointly, and making best use of given flexibility in the current arrangement, toward its successful conclusion and review on the basis of the proposals of, on the one hand, the Greek government and, on the other, the institutions.

This extension refers to the MASTER FINANCIAL ASSISTANCE FACILITY AGREEMENT (MFAFA).  So following KOLOTOUMBA’s search for the definition of what exactly is Greece requesting as an “extension”, we reviewed the MFAFA (available here for all readers who want to dig more: MASTER FINANCIAL ASSISTANCE FACILITY AGREEMENT.12.12.12) and it is clear that it is tightly bound to the dreaded MNIMONIO (Memorandum of Understanding – MoU).

mfafa-page-5
Page 5 of the MFAFA

Outcome: Double KOLOTOUMBA:

  1. The TROIKA is here to stay but with a different name,  “THE INSTITUTIONS“. The ECB, IMF and the EU are still the supervisory bodies.
  2. The MNIMONIO is also here to stay for at least six months more. The INSTITUTIONS will still need to supervise and approve any regulations that may affect Greece’s fiscal surplus.

UPDATE: Eurozone finance ministers are due to meet on Friday 20 February in Brussels to discuss the Greek request. However the German Finance Ministry Spokesman Martin Jaeger released the following statement: “The Greek government is trying to agree bridge-financing without meeting the conditions of its existing rescue program. The request is not a substantive proposal for a solution”.

Greece and the entire Eurozone are in desperate need of a KOLOTOUMBA, this time  by the Germans themselves, to avoid a global monetary melt-down.

Yes, Master FAFA

But can I borrow outside of a program?

kolotoumba, , , 5 Comments

The latest update is that the Greek Government, on Wednesday February 18  Thursday February 19, will follow-up the ultimatum set by the EUROGROUP two days earlier with a “request for a loan extension”. The EUROGROUP clearly stated that they expected a “request for a program extension”.  Government officials in Greece have been making this LOAN/PROGRAM distinction very clear.

Let us step back one step:  As we presented last week, in 2010  Greece signed with the INSTITUTIONS (formerly knows as THE TROIKA – EC/ECB/IMF) the “Economic Adjustment Program for Greece”, a memorandum of understanding on financial assistance to the Hellenic Republic in order to cope with the Greek government-debt crisis.

It is this “financial assistance” that is termed now as a “loan” and for which the Greek Government is (allegedly) requesting an extension.

But by having a closer look at the actual “Economic Adjustment Program for Greece” we will read that:

The release of each disbursement to Greece must be approved by both the Eurogroup and the IMF’s Executive Board. Prior to this decision, the European Commission, the ECB and the IMF staff conduct joint review missions to Greece in order to monitor compliance with the terms and conditions of the Program.

In simplified terms, each loan installment is to be given to Greece when the Government has met a set of milestones clearly linked to specific paragraphs/terms of the MEMORANDUM OF UNDERSTANDING (a.k.a. MoU a.k.a. – God forbid – MNIMONIO) the governing document of the Program.

The following is an excerpt of an actual EC/ECB/IMF report of 11 August 2014.

troika-report-excerpt

Notice the close links of DISBURSEMENTS, MILESTONES and the MOU?

OUTCOME:  Although not yet official, there is no legal background to ask for the EC/ECB/IMF to extend the LOAN disbursements without linking them to the specific PROGRAM and the MoU sections.  Some sort of KOLOTOUMBA is to be expected by either side.

But can I borrow outside of a program?

67% sounds about right!

kolotoumba, , , 1 Comment

2015-02-06 15_12_12-Financial assistance to Greece - European Commission

In 2010 Greece signed the MNIMONIO.  Actually it was the “Economic Adjustment Programme for Greece”, a memorandum of understanding on financial assistance to the Hellenic Republic in order to cope with the Greek government-debt crisis.

MNIMONIO is the Greek word for MEMORANDUM. In most Greeks conscience , it is the source of all problems that have caused austerity and a degradation of the quality of life in Greece. In reality it is a Contract defining the Economic Adjustment Programme which was signed between the Greek Government on one hand, and on the other hand by the European Commission on behalf of the Eurogroup, the European Central Bank (ECB) and the International Monetary Fund (IMF).

Source: http://ec.europa.eu/economy_finance/assistance_eu_ms/greek_loan_facility/index_en.htm

Since 2010 Greece has had five different Prime Ministers, three of them elected by the Greek people and two of them acting as temporary PMs between George Papandreou resignation in 2011 and Antonis Samaras election in 2012.

The current PM, Alexis Tsipras, has invested his political ambition and mandate into a very harsh anti-MNIMONIO agenda, eventually receiving a 35% electorate vote in January 2015.  Mr. Tsipras and his party SYRIZA has labeled the MNIMONIO as “disgraceful“, “onerous“, “reason for suicides“,  “reason for loss of sovereignty“, etc.  Mr. Tsipras has promised that he will “tear apart” the MNIMONIO on “the very first day” that he would assume his responsibilities as the Prime Minister of Greece.

Outcome: Well this is a very long journey of KOLOTOUMBAs to come. It will take many posts to describe how the MNIMONIO will be torn or not (or renamed or transformed or what-have-you). What was a very first glimpse of the colossal KOLOTOUMBA to come, is the statement made on February 5 by Greece’s Minister of Finance, Yanis Varoufakis, during a joint press conference with his German counter-part Wolfgang Schäuble.

When asked by a journalist which parts of Greece’s programme is the new government not prepared to meet Mr Varoufakis said:

It is not that the current reform program is to be discarded altogether.

I would say that 67% of what’s in that list consists of moves and measures that we should want to take ourselves

Source: 46:00 in the following video

Interesting approach considering that SYRIZA, not even once, voted for a measure, law or regulation that was brought to the Hellenic Parliament between 2010 and 2014.

67% sounds about right!