Greece will still need an additional €14.9 billion ($20.6 billion) in financial help through next year despite holding its first successful bond auction in four years and posting a primary budget surplus in 2013, according to an EU report on the rescue.
The report is the first public evaluation of the Greek program for almost a year. Its publication was delayed by a lengthy dispute between Athens and international lenders over whether Greece was complying with the terms of the rescue.
Earlier this month, eurozone finance ministers signed off on a €8.3 billion aid payment that had been delayed since September – ending the stand-off.
The new report says Greece's financing gap in 2014 stands at €2.6 billion, with an additional €12.3 billion needed in 2015.
EU officials insisted Athens could generate income from other sources. However, were the hole to remain unfilled when the existing EU rescue ends later this year, Greece would require a third programme.
Greek finance ministry officials disputed the figure, with one saying the €14.9 billion funding gap "appears to be an overestimate." A European Commission official acknowledged there were several ways for Greece to plug the gap without resorting to a third bailout, including additional bond auctions.
"If market conditions continue as they are now, I would not exclude that at a later stage, Greece could issue further bonds," said the EU official.
But the report also warned that lower-than-expected growth projections put Athens on a course to miss its debt targets, which the troika of international lenders – the European Commission, European Central Bank and International Monetary Fund – have insisted must get "substantially below" 110 percent of economic output in 2022, from a peak of 177 percent this year.
The report shows Brussels now expects Athens' debt to fall to 112 percent of gross domestic product in 2022 due to weaker growth – a consequence of Greece's deflationary trends and lower revenue from the privatisation of state assets.
Under a hard-fought deal reached in November 2012, Greece's lenders agreed to provide additional debt relief after Athens achieved a primary budget surplus – which excludes interest payments. Jeroen Dijsselbloem, head of the eurogroup of finance ministers, said these talks were set to begin after the summer.
The EU official declined to speculate on how eurozone governments would help to lower Greece's debt levels, insisting this discussion was not part of the just-completed review. The issue will be addressed in the next quarterly review instead, the official said.
Greek and EU officials believe that, in addition to more bond auctions, there are other possible ways in which Greece can avoid a third rescue programme. Were Greek banks able to continue to raise private capital – as they have successfully done recently – they would be in the position to pay back €3bn in preferred shares held by the Greek government this year.
"If the banking sector is able to recapitalise fully from private sector sources, we will have a cushion of bailout funding to cover the gap," said the Greek finance ministry official. If the banks are all able to fund their capital shortfall with private money, this could save the Greek government as much as €11bn in aid.
Two Greek banks this month raised €3bn on the markets – enough to cover fully the capital holes identified in recent stress tests required by the troika. Greece's remaining two large banks are expected to follow suit this month. However, all four banks may be forced to raise additional capital following the ECB's stress test of European lenders later this year.
Even if Athens were able to receive cash from its banks and access the unused funds in government agencies, it would still suffer from a funding gap of €9 billion. This would have to be filled by borrowing on the market or via a new rescue package.