Greece faces more reviews before release of aid
Envoys representing Greece’s international creditors on Sunday wrapped up an inspection of the country’s progress in meeting the terms of its second bailout and said they would return next month for a final review to determine whether further loans are released and a default is averted.
In separate statements, inspectors and Greek government officials said that significant headway had been achieved in the talks, which focused on euro 3 billion, or $3.7 billion, for 2012 in budget cuts the government has yet to implement, and an additional euro 11.5 billion in budget cuts demanded for 2013 and 2014. The cutbacks — chiefly reductions to state spending, pensions and social benefits — must be implemented in exchange for the release of further instalments of rescue funding.
The European Commission, European Central Bank and International Monetary Fund, known as the troika, have extended two bailouts worth euro 240 billion to Greece over the past two years.
Athens has fallen behind in meeting targets to reduce its budget deficit, blaming a deeper-than-expected recession that has cut into revenue.
Additional loan installments are crucial: Government officials have acknowledged that state coffers are running dry although EU leaders have said the means will be found to cover a euro 3.2 billion bond held by the European Central Bank that matures on August 20.
“Talks went well, we made good progress. We will take a break and come back in early September,” the IMF envoy, Poul M Thomsen, told reporters after a three-hour meeting with Finance Minister Yannis Stournaras that concluded 10 days of tough talks.
An official statement by the troika was even more restrained, noting that “discussions on the implementation of the program were productive and there was overall agreement on the need to strengthen policy efforts to achieve its objectives.”
In an unofficial briefing, a ministry spokesman told reporters that the talks had gone “very well,” that “systematic progress” had been made in identifying new sources for savings and that government officials were “not stressed” about the release of funding to cover the ECB bond.
A pledge by the conservative Prime Minister Antonis Samaras to seek the renegotiation of some of the more onerous terms of the country’s euro 130 billion debt deal, signed in February, has been set aside.
Instead, the authorities are focusing on reaching final agreement on budget cuts demanded by the troika to qualify for the next tranche of rescue funding — some euro 30 billion.
Last week, the leaders of Greece’s shaky tripartite coalition government, installed in June after two rounds of inconclusive elections, approved the euro 11.5 billion in budget cuts for 2013 and 2014 in principle but only after extremely tense talks.
Strong objections to additional cuts to pensions by the Socialist leader Evangelos Venizelos, who negotiated the debt deal in February as finance minister, had fanned fears of the fragile administration’s collapse. Venizelos, who argued that excessive austerity was unfair and would stoke social unrest, gave in after Samaras insisted that Greece’s solvency and position in the Euro zone were at stake.
In meetings later this month with European officials, the prime minister is expected to emphasise Greece’s determination to satisfy creditors’ demands and secure the country’s future in the euro.
Samaras is to meet with Jean-Claude Juncker, president of the Eurogroup of Euro zone finance ministers; Angela Merkel, the German chancellor; and François Hollande, the French president.
© 2012 The New York Times News Service