ECB president Mario Draghi traveled to Berlin on Wednesday in order to address German lawmakers, worried that his recent interventionist steps will compromise the central bank's independence and will have a negative impact on the euro.
Draghi defended ECB's bond buying program by saying that it was not resulting in higher inflation and that a decrease in prices in some EU Member States was posing a greater risk to euro price stability. He also assured that the program would not “lead to disguised financing of governments.”
Moreover, the ECB head acknowledged the first positive results of the reforms implemented by the EU Member States and urged national governments to “stay on course” as “in doing so, they will be able to unlock fully the enormous potential of the euro to improve living standards and carry forward the project of European integration.”
Nevertheless, he emphasized that they cannot restore market confidence in the Eurozone by themselves and that is why the ECB had to step in.
Reports of Greece given more time to reach deficit targets
Greek Finance Minister Yannis Stournaras announced on Wednesday that the Greek government has reached an agreement with the Troika inspectors on the terms of the bailout program. According to the official the distressed country will have more time to meet its deficit targets.
Mr Stournaras also informed that Greece will officially communicate the outcome of its talks with the Troika during a Euro Working Group meeting on Thursday and next week two separate bills on budget cuts and labor reforms will be presented in the Greek parliament.
Later on Wednesday the 94-page draft memorandum was leaked to the media. According to the document, the austerity measures agreed upon between Greece and the Troika include raising the retirement age from 65 to 67 and carrying out big reductions in the public sector, among others.
The successful completion of the negotiations means that Greece will be granted the next tranche of the rescue money, without which it would be soon facing a default.
Greece receives two more years of concessions - Suddeutsche Zeitung
After weeks of battling to struck a deal, it appears that Eurozone leaders have finally agreed to delay Greece meeting government budget deficit targets an additional two years until 2016.
While market skeptics are still plentiful and optimists few, the intention is to bring the country's budget deficit down to 3% of GDP. The news were leaked by German daily Sueddeutsche Zeitung, no sources were cited.
An structural overhaul on the labor and energy sector is also thought to have been given extra time until targets are met, the German paper reported. However, at present, much still needs to be discussed. According to a Greece Senior FinMin official: "No deal about the changes in labor market is still in palce, Troika will tell to EWG that there's no deal between political leaders."
On whether the next aid disbursement will come to Greece's shore in the days to come or there is still more tough negotiations with international creditors and the Troika, the paper suggests that it is almost a done deal that Greece will be shortly receiving the €31.5 billion, part of its next tranche of aid package. There is also unanswered questions, including who the payers will be so that Greece can comply with forthcoming debt paybacks, estimated at €15-€18 billion for 2013-2014.