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08 December 2013

Kathimerini: No troika deal in December as Greece falls behind with bailout pledges


Commission spokesperson Simon O'Connor said that although troika inspectors were due to return to Athens this week, negotiations would not have a chance of concluding until January at the earliest. However, finance Minister Yannis Stournaras is more optimistic.

“Technical discussions are expected to continue in Athens next week", said O'Connor. “We expect a full negotiating team to return to Athens in January, after the authorities have made further progress in implementation, with the objective of reaching a staff level agreement.”

Kathimerini has been informed that the troika mission chiefs wanted this press line to accompany their return to Athens to make it clear that talks would not be concluded during this visit. The aim is to play down expectations so a troika departure without a deal will not be seen as another blow to relations between Greece and its lenders. This qualifier was made public shortly before a crucial vote on the 2014 Greek budget on Saturday night despite the Finance Ministry making its objections known since Thursday.

A European official, speaking on condition of anonymity, told Kathimerini: “Mission chiefs return on Wednesay but with reduced teams. They should stay about a week. Full teams will then return in January. As much progress as possible will be made in December and if we can conclude on any issues, of course we will. No one wants this to go on longer than necessary. But given the amount of issues still open, a full staff level agreement in December is just not realistic.” The same official said it was pure coincidence that the announcement was made as MPs were preparing to vote on the 2014 budget.

Earlier this week, the eurozone's troika partners received an email from the International Monetary Fund detailing Greece’s record of compliance with its adjustment programme commitments since last summer. The data table included in the email left no room for doubt: Not only are we nowhere near the conclusion of the autumn review of the Greek programme, but the situation is slowly but steadily deteriorating.

Overall, Athens was supposed to fulfil 135 commitments for the successful conclusion of the autumn review. The number currently stands at 60 and progress is getting slower by the day, amid a political stalemate in Athens, where the government is struggling to appease its backbench MPs and protect its wafer-thin parliamentary majority.

Eurozone governments are expected to agree on a new round of measures, which will ease Greece’s debt servicing burden in the summer of 2014, once it has been established that the country has achieved a primary budget surplus. It will be politically unfeasible to convince their parliaments to agree on such measures if the Greek reform programme appears, once again, to be off track.

Troika officials, entrusted with making good use of hundreds of billions of euros of taxpayers’ money channelled to Greece via cheap loans, remain cautious. They tell Kathimerini that there is movement in the right direction but it is going very slowly and there are still a lot of outstanding issues on which the authorities have to deliver. That, plus backtracking on earlier commitments, makes it very likely that the talks will drag on into next year.

Another EU official is even more blunt: the Greek government’s apparent intention of unilaterally legislating or deciding on open issues related to the review, like foreclosures, reduced VAT in restaurants or mass dismissals, without prior consultation with the troika, is not just unhelpful but is seen as a provocation.

Full article


Greek Finance Minister Yannis Stournaras is optimistic that the government may still come to a deal with the country's international creditors by the end of this month and clinch the disbursement of the next tranche of bailout funding, worth €1 billion. Speaking to CNBC, Stournaras said "the milestones seem to be okay so we expect the disbursement of the instalment by the end of the year”, contrasting with statements earlier in the day by Eurogroup chairman Jeroen Djisselbloem, who said that it would be “very, very hard if not impossible” for the troika’s review to be finalised by the end of the month.

The Greek finance chief also struck an upbeat note when asked about the government's projections for the economy next year. "I'm very optimistic about next year. We're going to have positive growth so we can have... limited [market] access next year, but it will be the first time since 2010 so it will be very important”, Stournaras told CNBC.

He was also optimistic about the size of an estimated fiscal gap next year, the size of which his another issue splitting Athens and troika. "We have a very big output gap, this gap closing slowly. This closing generates growth and driving forces next year will be investment and exports”, Stournaras said.

Full article, 10.12.13


Dimitris Kontogiannis writes that Greece should consider applying for a precautionary credit line, ideally at the same time as Portugal. He writes that Greece is likely to end up with a cumulative financing gap of €18-20 billion by the end of 2016, including a shortfall of €3-4 billion from privatisations. Given the creditors’ unwillingness to extend new funding and the government’s eagerness to avoid a new conditional bailout loans from the troika, a precautionary credit line may be the best way forward.

Kontogiannis goes through other options, more austerity, debt rollover, T-bills issuance, and tapping into bank recapitalisation funds, concluding that they offer no clear-cut solution for closing the gap and might even create secondary problems instead. It will be easier for Greece to wait for Portugal to go through the process first and thus deliver a template, he says. In the meantime, Greece has to show more progress on the fiscal front and structural reforms and conclude the current review with the troika.

Further reporting, 9.12.13



© Kathimerini


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