Eurogroup

Greek sovereign bond yields posted a rapid decline on Wednesday despite the mild trend observed on other eurozone markets, a day after the strong rally on statements by European Central Bank chief Mario Draghi. This illustrates that investor sentiment toward Greek assets has changed, as they attract an increasing number of foreign portfolios.

The next government in Greece will be the one to offer the necessary explanations to the Eurogroup about the outgoing administration's handouts, which appear to be leading the country toward a fiscal derailment and target shortfalls.

It is highly improbable that Greece will be discussed during Thursday's Eurogroup in Luxembourg, a top eurozone official said Wednesday.
The same official said that the third report on Greece's enhanced post-program surveillance issued by the European Commission will be discussed by the eurozone finance ministry staff (Euro Working Group) after Greece's July 7 elections.

Eurozone finance ministers are hoping their outgoing Greek counterpart, Euclid Tsakalotos, will not skip this Thursday's Eurogroup meeting - like he did last month - so that they get the chance to personally express their objections to the Greek government's policies, as explained in last week's European Commission report.

As elections approach it is apparent that despite so many years of economic crisis, sacrifices, and traumatic experiences nothing has changed.

With PM Alexis Tsipras donning the cloak of protector of the poor and punisher of the elite, promises, handouts, and divisive tactics are the order of the day.

Finance Minister Euclid Tsakalotos on Monday dismissed officials who have expressed concern over the government's handout policy ahead of the elections - including the head of the European Stability Mechanism, Klaus Regling - as "austerity supporters," although concerns are also being raised by others much closer to home, at the Parliamentary Budget Office (PBO).

Finance Minister Euclid Tsakalotos chose to skip last week's Eurogroup meeting in Brussels, where serious criticism was expressed against Greek government decisions. The minister's explanation for staying in Athens was that Greece would not be on the agenda of the eurozone finance ministers' talks, which he knew was not the case.

The Eurogroup has postponed the "battle of forecasts" on the Greek budget until after the European elections. On June 5, the report of the European Commission on the third post-bailout assessment will reflect its own estimate of the Greek primary surplus (and the recent voting of measures for 2019). However, the big battle will take place this fall.

Eurogroup finance ministers and Bank of Greece Governor Yannis Stournaras may be ringing the alarm bell regarding the fiscal consequences of a barrage of handouts that the government is announcing, but it appears that the PM's office has decided to press forward anyway in order to change the negative political climate.

European Stability Mechanism chief Klaus Regling expressed fears concerning Greece after Thursday's Eurogroup, particularly regarding the government handouts.