The President of the European Central Bank said on Monday that Greece’s debt must be sustainable and the second review of its programme completed as prerequisites for Greece's inclusion in the quantitative easing.
Addressing the European Parliament's Economic and Monetary Affairs Committee in Brussels, Draghi explained that the sustainability of Greece's debt must be addressed before the ECB can proceed to buy Greek debt.
"We can be closer to the goal of buying Greek debt if the second review is completed soon, otherwise we can wait," Draghi said.
Once the review was concluded, he explained, the ECB's board will carry out its own, fully independent assessment of the sustainability of Greece's debt.
Consequently, Draghi added, a reliable assessment of Greek debt sustainability required the completion of the second review.
Germany has long opposed trimming Greece’s debt but now the ECB along with the IMF have admitted that the debt is unsustainable and must be addressed for any meaningful results on the reforms.
The IMF recommends that Greece should adopt a "fiscal neutral policy" and noted that its economy did not need any further adjustment. However, it noted that "fiscal reforms" were needed such as reducing a tax exempt sum in order to expand the tax base and deal with the tax evasion problem.
It also said that the country's financial sector should drastically reduce its non-performing loans, to strengthen corporate governance rules and to abolish remaining limitation in capital movement (capital controls) the soonest possible.
