Full Text Of EMU Statement Of Support For Greece

Tyler Durden's picture

“Following the statement by the Heads of State and Government of the Euro area on 25 March, Euro area Members States have agreed upon the terms of the financial support that will be given to Greece, when needed, to safeguard financial stability in the Euro area as a whole.

“Euro area Members States are ready to provide financing via bilateral loans centrally pooled by the European Commission as part of a package including International Monetary Fund financing.

“The Commission, in liaison with the ECB, will start working on Monday April 12th, with the International Monetary Fund and the Greek
authorities on a joint programme (including amounts and conditionality, building on the recommendations adopted by the Ecofin Council in February). In parallel, Euro area Members States will engage the necessary steps, at national level, in order to be able to deliver a swift assistance to Greece.

“Euro area Member States will decide the activation of the support when needed and disbursements will be decided by participating Member States.

“The programme will cover a three-year period. The euro area Member States are ready to contribute for their part up to E30 billion in the first year to cover financing needs in a joint programme to be designed with and co-financed by the IMF. Financial support for the following years will be decided upon the agreement of the joint programme

“In order to set incentives for Greece to return to market financing, Euro area Members States loans will be granted on non-concessional interest rates.

"The pricing formula used by the IMF is an appropriate benchmark for setting Euro area Members States bilateral loan conditions, albeit with some adjustments. Variable-rate loans will be based on 3-month Euribor. Fixed-rate loans will be based upon the rates corresponding to Euribor swap rates for the relevant maturities. A charge of 300 basis points will be applied. A further 100 basis points are charged for amounts outstanding for more than 3 years. In conformity with IMF charges, a one-off service fee of maximum 50 basis points will be charged to cover operational costs.

“For instance, as of April 9th, for a three year fixed-rate loan granted to Greece, the rate would be around 5%.

“The Eurogroup is confident that the determined efforts of the Greek authorities and of its European Partners will allow [the Greek
government] to overcome the fiscal and structural challenges of the Greek economy. In this context, the Eurogroup welcomes the budget execution in the first months of the year, which shows that the measures taken so far are bearing fruit.”

h/t Market News

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FischerBlack's picture

So they're not making any concessions on the market interest rate, except for the part where they give them a 2% discount to the market interest rate.


hambone's picture

No concession except for the part they don't really have to pay the money back (seriously, where would the Greeks come up w/ cheaper money in 3yrs time, oh, they'll just roll it over indefinitely w/ the EU (you give me another 40 billion and I give you back your 40 billion, there, we're even)...and, oh, no concession but the Greeks don't actually have to hit the budget targets.  That would cause trouble (just keep hiding it under the carpet).

Just keep the wheel turning.

George the baby crusher's picture

Honestly, it really is very funny.  Funny strange, if you know what I mean?

hedgeless_horseman's picture

Is it just me, or do these terms sound like they plagiarized from a 2003 Countrywide mortgage? After the buy down, show 'em a teaser rate on the first, but then bury the actual APR.  EU couldn't underwrite the LTV, so have IMF write the second at a higher rate.

There is nothing new under the sun. 

Eally Ucked's picture

We have to understand that other countries in Euro zone won't escape similar to Greek problems ( US, UK, Canada and so on will be in the same situation, earlier or later) and logic dictates that if you see imminent colapse you'll be better off to be one of the first. Will to patch up something which is not patchable will be so strong that they will agree for anything. That's western economy thinkers mantra "just delay inevitable and it suddenly turns into prosperity". So to me Greeks doing right thing, get as much as possible before other beggars show up on the scene. And I bet you in few years they will be first to emerge from that shit we created! Sorry not "we" they!

Cleanclog's picture

“Euro area Member States will decide the activation of the support when needed and disbursements will be decided by participating Member States".  

I predict much squabbling among the Member States for each disbursement.  Portugal and Germany will likely have different standards.  Each roll over and new financing will raise issues of whether Greeks are adequately conforming with austerity measures - again with disagreement among the Member States.

Does IMF have usual "teeth" in this arrangement, or is it diluted by partnership with ECB and Member States?

This is far from solved and over.  A palliative life extending medicine for the Greek symptom does not cure the PIIGS disease.  Expect more anger at street level by Member State populations.  Elections will be impacted and hopefully violence will not forment further.

CombustibleAssets's picture

"I predict much squabbling among the Member States for each disbursement. "

I predict you're right.

ignorant's picture

Eventually Kassandras predicting/pushing Greece to bankruptcy failed and as it seems lot of mony wl be lost by monday.

One more term in agreement with immy effct :  "with quick legal procedures to be hanged all fucken Greek corrupted politicians and officials"

knukles's picture

Heh heh hehhh
No concession to market rates.
BUT can only draw upon the facility when unable to borrow in the open market, at what would be a market rate, which don't then exist since no can borrow.
At a 2% discount thereto, whatever that means.

Somebody in the Babel-Land of Socialist States, for their own sake ought keep these geniuses away from the microphones.  Something about stop digging?

Say sayonara to the Euro as a;
1.) reserve currency
2.) credible currency
3.) currency
4.) all of the above
5.) forget the polemics...substitute New and Improved Double Ply Charmin.

nonclaim's picture

In parallel, Euro area Members States will engage the necessary steps, at national level, in order to be able to deliver a swift assistance to Greece.

Fantastic "plan". Do we have details on the necessary steps?

sushi's picture

Key phrase:

“Euro area Member States will decide the activation of the support when needed and disbursements will be decided by participating Member States."


Member states will deliver funds when they feel the Greeks need it, not when the Greeks feel they require it.

The amount of the disbursements will be at the discretion of the member states and not necessarily aligned with the needs of Greece.


So the question becomes how much will Ireland contribute to the welfare of Greece when Ireland is undergoing severe austerity retrenchment? Answer: zip.

How much will Portugal and Italy contribute? Answer: zip

How much will France and Germany contribute? Answer: Just enough to ensure that their own banks do not take a loss on their Greek bondholdings.

In other words the EuroStates will act to cover the exposure their domestic banking systems may have to the Greek crisis but beyond that the Greeks will be left with ouzo.

CombustibleAssets's picture

Nobody is bailing anybody out.

This is more marketing propaganda designed to help the Greeks sell bonds that nobody wants.

ZeroPower's picture

So Greece will be able to borrow at 3yr//5% fixed while their 10yrs are having trouble at 7%. Wonderful.

tom a taxpayer's picture


"The pricing formula used by the IMF is an appropriate benchmark for setting Euro area Members States bilateral loan conditions, albeit with some adjustments" including state-of-the-art accounting irregularities and Goldman-esque prestidigitations to fool the public (see footnote1).

Footnote 1 - Regulators are in our pockets and will agree with any accounting nonsense we claim. So, it is only the public we need to fool.


Quintus's picture

Isn't it illegal under the terms of the Lisbon Treaty for any member state to bailout any other?  Aren't there hoards of German lawyers and economists just waiting for the chance to refer any Greek bailout involving German money to the German Constitutional Court?  The Lisbon Treaty itself was delayed for months by a similar action, let's not forget.  Is it too much of a stretch to imagine that (a) a case will be filed at 9am tomorrow CET to halt any payments from Germany into this rescue fund until cleared by the court and (b) Even if the Constitutional Court eventually gives the go-ahead, Greece will have sunk under the waves during the intervening months?

A Man without Qualities's picture

I reckon it will take them until midday until someone cites a reason why the loan terms are unconstitutional.  They cannot provide subsidized loans so they need to charge the market rate, but the market won't lend unless there is support, so there is no "market rate".  I suspect they will argue that the market rate would be 5% if there was support, but I am not sure how this will be seen by the courts.  The other point is, what is the purpose of the loans?  They do nothing to help Greece deal with their deficit, and in fact, the attempts to reduce the deficit will only shrink GDP further, making servicing the loans harder.  There is nothing to suggest that lending to Greece now will prevent the inevitable rather merely delay it.

Edward Hugh is one of the best writers on this topic around at the moment, this is his take.




Quintus's picture

Excellent link.  Thanks.  There will be no German 'Loan' because anything less than a market rate of interest is unconstitutional and there is no market rate unless support for Greece is already in place (a circular argument).  This 'Plan' will come to naught.  Like all the others.   

knukles's picture
Any monetary aid extended to Greece (or other member state) by any of the EU countries is in DIRECT violation of a clause within the original (?) Treaty of Rome and carried forth in each successor EU document explicitly prohibiting extensions of credit between member governments.    The provision was initially inserted in the agreements in order to protect "stronger " members from being beggared by their "weaker" partners.  The worries of "beggaring thy neighbor policies" was originally subsumed from the standard pre-Euro practice of competitive devaluations between European countries and later, within the EFTA.  Aka, why the Germans have been reluctant to begin the rape of the Northern Countries Treasuries via Brussels and the ECB.  Thus the complex machinations as to the activation being necessitated by multiple layers of multiple country representative bodies.  Sounds "good" such that the EU is solving the problem (plan and message intended for the external viewer) whilst telling the local population (Germans, for example; "Poke poke, wink wink, nod, they ain't got it yet and we can make it soooooo difficult for them to, so don't worry.") They forget that both audiences hear the same prognostications and polemics. Gives new meaning to "Hold yer shorts!"  
Lux Fiat's picture

Reminds me of a joke where the punch line was "Bring me my brown pants."

Attitude_Check's picture

This is still just jawboning, it means nothing.  What will happen to the Greek rates when this bailout announcement is found to have no funding behind it?  How long will it take for the 27 Euro nations to ratify it - without a SINGLE no vote.


Who wants to lay odds?

ZackAttack's picture

Let me know when someone actually writes a check, as opposed to using the jawbone as the primary instrument of policy.

glenlloyd's picture

bearing fruit my ass...rotten fruit maybe.

All this is is another shell game, those who provide the loans become more vulnerable to the Greek failure. Besides, now you've just said you'll bailout everyone so there's no incentive to try and get things under control.

It's like the crazy drivers out there now who think that if they just push on the accelerator a little more that everything will be all right....sorry folks, aint gonna happen, I always see you at the next light anyway.

This is just the beginning

Lux Fiat's picture

I fear that you are likely right, and that this is just a lull between bands on the leading edge of a massive storm. 

However, all the optimism in the market over this latest development gives the big boys more time and opportunity to distribute into strength.

Grand Supercycle's picture


The bear market rally wants to continue for a bit longer ... 

DOW/SP500 daily bull signals from Friday 9 April continue.


trav7777's picture

IMF charges a sovereign state a "fee"??  WTFLOLz

Junk fees just like a mortgage.  Where's the doc fee, attorney fee, stamp fee, binder fee, courier fee, and all the rest?