Greece draws road map to debt relief talks

Greece draws road map to debt relief talks

Athens, March 9, 2016/Independent Balkan News Agency

By Zacharias Petrou

Greek government officials appear pleased with the results of Monday’s Eurogroup meeting in Brussels.

The high-ranking officials representing Greece’s creditor institutions will resume talks with the Greek government in Athens with a view of wrapping up the first review of the country’s bailout program.

On Tuesday, German Finance Minister Wolfgang Schaeuble said Greece’s lenders expect to have finished verifying that Athens has carried out promised reforms by the Greek Orthodox Easter in late April or early May.

Developments are particularly pleasing to Greek government officials as the completion of the first review is expected to mark the beginning of talks on much-needed debt relief.

Schaeuble played down the importance and scope of such relief; however, he acknowledged the debate was now open.

The German Finance Minister said that any discussion of Greek debt relief would be “about prestige, not substance“, adding that he had “no good argument to present German lawmakers or the German public opinion”.

Greek government sources were not put off by the remarks. In fact Athens now plans to push through all the reforms and measures outstanding from the bailout agreement struck last summer in order to get the talks on debt relief underway by May 1.

For the Syriza – ANEL government, the commencement of debt relief talks could put a halt to declining popularity figures in recent opinion polls and provide impetus for an economic recovery in the second half of 2016.

The Greek side will have a difficult time in negotiations with the top “quadriga” envoys in the next few weeks as there are still great differences on a series of tough issues to bridge. Analysts point out that the Prime Minister should be preparing to make deep compromises on pension and tax reform, dealing with non-performing loans and fiscal issues if the review is to be successfully completed without further delay.

The thorniest issues on the table so far concern the coverage of the fiscal gap up to 2018; the social security and taxation reform, dealing with non-performing loans; the setup of the new privatizations fund to replace TAIPED; and the independence of the General Secretariat for Public Revenues.

Furthermore, European institutions and the Greek government have still not bridged their differences with the IMF as regards the fiscal gap. The IMF insists on the need for extra measures worth 7.5-9 billion euros to be implemented through to 2018 while the European institutions puts this requirement at 5.5 billion euros and Athens says the gap stands at 1 – 1.8 billion euros.

The role of the International Monetary Fund in the upcoming negotiations may prove decisive for the future of the upcoming talks. The IMF is both an ally and a foe for Athens as it has backed Alexis Tsipras on his plea for serious debt relief while at the same time it demands Greece makes deep pension cuts and implements additional austerity measures worth up to approximately 9 billion euros through to 2018.