Regling’s ambiguous statement: Liquidity situation will become tight again in February

The Euroworking Group meeting held on Thursday concluded after three hours with the Finance Ministers of Eurozone not taking any decision as it was expected.

The meeting begun with Eurogroup President Jeroen Dijsselbloem and German Finance Minister Wolfgang Schäuble hailing the hard work of the Greek government regarding the reforms on social security system.

However, the statement of Klaus Regling, head of European Stability Mechanism, after the meeting was quite ambiguous.

Mr. Regling told reporters that the Greek government faces some urgency in completing the review “to improve confidence but also because the liquidity situation will become tight again over the next few months.”

The statement could be interpreted as either there will be no other options for the government to increase its revenue, since it is expected all taxes to have been paid until the end of February, or that after February the government will struggle to meet its obligations.

Mr. Dijsselbloem said that completing the review will might take months rather than weeks and stressed the resulting reward for Greece.

“Once the institutions and the Greeks have come to an agreement on the first review, then we will start political debates on debt sustainability,” he said. “We promised to do that, we need to do that.”

Arriving at the meeting, Mr. Schäuble said the Greek government is making significant efforts, while the delay in conducting the first review of the Greek programme was “understandable”.

He also reported having “constructive talks” with his Greek counterpart Euclid Tsakalotos in Berlin during their meeting on Wednesday and expressed his conviction that Greece will proceed with the implementation of the agreements “step-by-step” with the next step being the review of the programme, which must be completed successfully.

“I have to compliment the current Greek government because it has done a lot of work on a number of packages of reforms. Of course this program is frontloaded … there are now a couple of issues on the table, the pension reform, some fiscal issues, the budget 2016 has some open issues, setting up the privatization fund,” Mr. Dijsselbloem said arriving at the meeting.

“If all that is done in the coming weeks and it has to be finalized with the institutions and we have a staff-level agreement from the institutions on that first review … then we’ll start political debates on debt sustainability. We promised to do that, we have to do with that, also to get the IMF aboard,” he added.

Commenting on the proposal on the reforms of Greece’s social security system revealed by Greek Finance Minister Euclid Tsakalotos, he said it is a “serious proposal”. “It’s obvious they’ve done some serious work on that. It has to become financially sustainable proposal,” he noted.