Vasilis Giavris (Lawyer & Political Scientist)
The Greek Government has today received a four (4) month extension to the Master Financial Assistance Facility Agreement (“the MFAFA”).
The MFAFA was entered into in 2012 and contains terms and condition Vis-à-vis loans to Greece*. The MFAFA makes reference to various memorandum agreements (past and future) all together referred to as Memorandum of Understanding (“MoU”) The MoU contain specific terms and conditions to be followed by Greece in regard to various areas including fiscal policy.
The MFAFA was entered into in 2012 and contains terms and condition Vis-à-vis loans to Greece*. The MFAFA makes reference to various memorandum agreements (past and future) all together referred to as Memorandum of Understanding (“MoU”) The MoU contain specific terms and conditions to be followed by Greece in regard to various areas including fiscal policy.
The original agreement precluded funds to be disbursed subsequent to 31 December 2014. However, the previous Greek government sought a two (2) month extension and as such funds could be disbursed up until 28 February 2015 (in this regard a new MFAFA Second Amendment Agreement was entered into**).
The new Greek government has watered down its previous rhetoric and by letter dated 18 February 2015, it requested a further extension, stating amongst other that: “The Greek authorities honour Greece's financial obligations to all its creditors as well as state our intention to cooperate with our partners in order to avert technical impediments in the context of the Master Facility Agreement which we recognise as binding vis-a-vis its financial and procedural content” ***.
The Greek government insists that the agreed extension relates to the extension of the MFAFA and not the MoU («μνημόνιο») and as such is keeping its word to the public (ending the mnimonio).
Food for Thought
Clause 7 in the MFAFA states that: “The availability and the provision of Financial Assistance under this Agreement,…….shall, unless otherwise specified, be conditional upon (i) the Beneficiary Member State's compliance with the measures set out in the MoU and..”.
Food for Thought
Clause 7 in the MFAFA states that: “The availability and the provision of Financial Assistance under this Agreement,…….shall, unless otherwise specified, be conditional upon (i) the Beneficiary Member State's compliance with the measures set out in the MoU and..”.
Today's Eurogroup Statement**** (approved by Greece) amongst other states:
"The Eurogroup notes, in the framework of the existing arrangement, the request from the Greek authorities for an extension of the Master Financial Assistance Facility Agreement (MFFA), which is underpinned by a set of commitments The purpose of the extension is the successful completion of the review on the basis of the conditions in the current arrangement, making best use of the given flexibility which will be considered jointly with the Greek authorities and the institutions. This extension would also bridge the time for discussions on a possible follow-up arrangement between the Eurogroup, the institutions and Greece. ".It further states that: "The Greek authorities reiterate their unequivocal commitment to honour their financial obligations to all their creditors fully and timely".
Is an extension of the Loan Agreement not an extension and recognition of the MoU (Mnimonio) albeit with the ability to make mutually agreed changes to the current arrangement? Was this not the case anyway?
***http://www.reuters.com/…/eurozone-greece-request-idUSL5N0VT…
****http://www.consilium.europa.eu/en/press/press-releases/2015/02/150220-eurogroup-statement-greece/
****http://www.consilium.europa.eu/en/press/press-releases/2015/02/150220-eurogroup-statement-greece/
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