Regling: There are three reasons why Greece needed another bailout

“Greece is not close to any default. We are working to conclude the review and avoid problems of last year” said director of the European Stability Mechanism (ESM) and CEO of the European Financial Stability Facility (EFSF), Klaus Regling.

In an interview with Corriere Della Sera, Mr. Regling said “There is an eight month delay in the review because there are relevant implementation problems in Greece” adding that “These measures are a compromise for diverging evaluations, but they also provide an insurance against unforeseen events”.

Asked on whether Greece is running a new risk of default, he said: “Greece needs money from the ESM – this is why we agreed a new program last summer. The situation has improved compared to some years ago: Greece has now a primary surplus, so it doesn’t need money every month to finance its budget. At the end of July there is a real need for liquidity due to a sizeable debt repayment. The sooner we get an agreement the better, to allow Greece to pay the domestic arrears. This is critical for the good functioning of the economy. So we are not close to any default. We are working to conclude the review and avoid problems of last year”.

In a question on why previous bailouts did not work for Greece as they had for Ireland, Spain and Portugal, Mr. Regling answered that: “Greece is an exception compared to other countries. This is why a third programme was needed,” adding that overall European partners and the IMF have already given around €250 billion to Greece.

According to ESM director, there are three reasons why Greece needed another bailout.

“First: the starting position in terms of economic problems was far more serious than that of the other programme countries.

Second: we’ve learned that the Greek administration is very weak, which affects their ability to implement the program.

Third: after the early 2015 election there was an interruption of the program and backtracking on reforms – this had a huge negative impact on the economy, pushing Greece back into recession”.