At its extraordinary session today, the Riigikogu (Parliament of Estonia) approved the draft Memorandum of Understanding between the European Commission and the Hellenic Republic. With this, Estonia agrees to approving the political agreement on the third financial assistance programme for Greece.
50 members of the Riigikogu voted in favour and 37 against the Resolution of the Riigikogu “Approval of the Draft Memorandum of Understanding between the European Commission and the Hellenic Republic” (69 OE), submitted by the Government.
The resolution on granting Greece a loan of up to 86 billion euro will be on the agenda of the Board of Governors of the European Stability Mechanism (ESM) on 19 August.
With the support of the programme, the debt burden of Greece should fall to 174.9% of GDP by 2020, after achieving the peak of 200.9% of GDP in 2016. The main targets of the assistance programme, which will last until August 2018, are to restore the sustainability of the state budget, to ensure financial stability, to promote economic growth, competitiveness and investments, and to modernise public administration.
In the opinion of the Minister of Finance Sven Sester, who represented the Government, the memorandum on the economic policy of Greece will provide a good basis for developing the state and economy of Greece, and will thus also contribute to the general stability of the euro area. “Primary surplus and the ambitious package of reforms supporting it, and also making the people of Greece understand that there is no alternative to changes have been set as the targets of the programme,” Sester said.
According to the Minister of Finance, the reform of the VAT system, abolishing of exceptions in the tax system, achieving new quality in the collection of taxes, implementing the pension system reforms and privatisation are important for achieving the fiscal targets.
Sester emphasised that the loan granted to Greece from the ESM will not increase the obligations of Estonia, and the state will not have to provide new additional guarantees. “Our share in the ESM is 1.3 billion euro, of which we have already paid the contribution of 148.8 million euro by 2014. These obligations will not increase because of the ESM loan,” said Sester. He added that the risks connected with Greece will remain, but if Greece acts according to the agreed-upon programme, its chances of economic recovery are better than by giving up and letting things run by themselves.
Remo Holsmer, the Chairman of the lead committee, the Finance Committee, said that the factions had submitted no motions to amend to the draft.
In Holsmer’s opinion, the structural reforms in the country are a precondition for loaning money to Greece. “Greece had to take first steps in order to start negotiations, and these have to continue in the nearest future. Also, there will be regular revision of reforms before he loan payments,” Holsmer said.
Holsmer assured that the International Monetary Fund (IMF) had not distanced itself from the process, but had all the time actively participated in the negotiations. “It is true they have wished to write off the loans, but the governments of the Member States, including the government of Estonia, certainly do not support the writing off of the taxpayers’ money and forgiving. IMF’s possible joining of the programme will become more realistic after the first accounting period and assessment, most probably in October,” Holsmer said.
Andres Herkel, Martin Helme and Kadri Simson, who spoke on behalf of the opposition parties at the debate, were on critical position in regard to the third assistance programme for Greece and the draft memorandum. Kalvi Kõva, Priit Sibul and Kalle Palling, who represented the coalition parties, expressed support to the aid programme and the memorandum in their speeches.
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