Greece looks to clinch last-gasp deal with troika before critical Eurogroup meeting

Greece looks to clinch last-gasp deal with troika before critical Eurogroup meeting

 

By Lefteris Yallouros – Athens

Monday’s Eurogroup meeting in Brussels is crucial for Greece as it is expected to decide whether or not the next tranche of the country’s bailout loan (EUR 8.1 bln) will be disbursed in full.

The discussions between Greece and its international lenders have “a reasonable chance” of resulting in an agreement that will be presented to euro-area finance ministers, EU Economic and Monetary Affairs Commissioner Olli Rehn said Sunday.

The decision will be based on the troika’s assessment of progress made by the Greek government on its adjustment program. Seven days of talks ended Sunday in Athens between ECB, EU and IMF officials with the Greek Prime Minister and several ministers. The two sides reportedly agreed on reforms that Athens will have to push through over the next few months.

Public Administration Reform Minister, Kyriacos Mitsotakis, will have to cut thousands of jobs in the public sector. Some 25,000 civil servants will be placed in a “labor-reserve pool”. They will be paid 75% of their wages until they are transferred to other positions. If other jobs aren’t found within eight months, they will be dismissed. The plan is part of a broader commitment by Greece to reduce its public workforce by at least 150,000 workers by the end of 2015.

The two sides have also reportedly reached an agreement over a supposed funding gap of about 2 billion euros for the remainder of 2013 as well as 2014. Privatizations will have to move at a faster pace and cuts will be made in healthcare funding in order to bridge the gap.

Greece and troika officials will conclude discussions on Monday at the Eurogroup Working Group that will prepare the final document for presentation to the finance ministers for approval. The law imposing these measures will be submitted to Parliament by Tuesday.

An issue left open for discussion was that of a possible reduction of VAT for restaurants to 13 percent from 23 percent.

In the event that Greece doesn’t secure the Eurogroup’s go-ahead, it will be forced to access short-term market financing, or be paid the rescue money in sub-tranches until eurozone Finance Ministers meet again to assess the Greek program in mid-September.

Addressing a New Democracy Political Committee meeting on Sunday, Prime Minister Antonis Samaras said his party was united in a common purpose with coalition partner PASOK to bring the country out of the current crisis.

Reforms, however, will not be an easy task for the government. Municipal workers nationwide called a strike for Monday in reaction to the planned lay-offs while Athens Mayor G.Kaminis was attacked by unknown assailants Sunday night outside the Athens Town Hall where angered municipal employees gathered to protest.