Troika concludes Greek bailout review; next aid tranche soon

Euro zone finance ministers and the IMF's board likely to discuss the agreement in May

An inspection team of international lenders has finished its review of Greece's reform progress, paving the way for another euro 10 billion aid payment, a source with knowledge of the talks said today.

The deal reached yesterday, concludes the first review by the so-called "troika" of the European Commission, the International Monetary Fund and the European Central Bank since they unlocked fresh aid in December, staving off a chaotic bankruptcy.

In exchange for the December deal in Greece's euro 240-billion bailout, Athens passed a fresh round of austerity measures.

"The third review mission of the programme was completed last night in Athens with a staff level agreement," one delegate with knowledge of the discussions told Reuters.

The official added the Eurogroup of Euro zone finance ministers and the IMF's board would each likely discuss the agreement in May, a condition for the money to actually be paid. Klaus Regling, the head of the Euro zone's rescue funds, said yesterday the European Financial Stability Facility, under which Greece's rescue is handled, stood ready to disburse euro 10 billion ($13 billion) to Athens once conditions were met.

"Greece would get euro 2.8 billion after the milestones have been met. In addition 7.2 billion (euros are) available in bonds to recapitalise the banks. This is based on a tranche already approved last December," he told reporters.

Greece has received about euro 200 billion in rescue loans since its first bailout in May in 2010. But despite imposing a 75-per cent debt cut on private-sector bondholders and receiving debt relief from its official lenders last year, it is still far from returning to bond markets.

The recapitalisation of Greece's banks and shrinking the country's spendthrift public sector had been key issues on the agenda of talks with the troika, which resumed its visit in Athens earlier this month.

Plans for Greece's National Bank to integrate its newly acquired rival Eurobank were suspended this week after the troika raised issues over the size of the merged entity and the banks said they were unlikely to raise enough capital to stay private.

Lay-offs are also a sensitive issue in Greece where unemployment has hit a record high of 27.2 per cent and the economy is now in its sixth year of recession.

With the country's constitution protecting state workers from dismissal, Greek Prime Minister Antonis Samaras said in an interview with a newspaper today the government could reduce staff by scrapping job positions.

"There is no doubt we need a smaller but also better public sector," Samaras said. "The constitution doesn't ban the dismissal of state workers whose position has been scrapped."

Samaras was expected to meet the ruling coalition's party leaders on Saturday and discuss the progress of the talks with the troika.