Greece to resume talks with troika after Eurogroup meeting

Greece to resume talks with troika after Eurogroup meeting


By Lefteris Yallouros – Athens

Greek Finance Minister Yannis Stournaras will attend a Eurogroup meeting in Brussels Monday without an agreement between the government and troika inspectors to present to his EU counterparts.

Inspectors insist on  liberalization of the food industry and the health sector; further lay-offs in the public sector; lower salaries for new hires; no increases in the minimum wage and salary cuts for some civil servants.

However, a deal has been reached with troika envoys over the amount of capital Greek banks will need. The issue had been a stumbling block during the negotiation saga. A Finance Ministry official reportedly suggested that IMF representative Poul Thomsen had backed down during talks over the weekend.

The Bank of Greece put lenders’ capital needs at 6.4 billion euros while the IMF argued that 8 to 9 billion euros of new funding would be needed.

It is thought that the announcement of a capital increase by Pireaus Bank and Alpha Bank last week may have played a part towards persuading the troika officials to back down from their demands on the issue. The two banks announced share offerings exceeding their stress test requirement by a wide margin while Eurobank has lined up a group of international funds as potential investors.

“We expect the eurogroup meeting to acknowledge that progress has been made . . . The issue of the Greek banks’ capital requirements no longer appears to be an obstacle,” a senior Greek official said at the weekend.

The ECB is set to conduct its own (Eurozone-wide) tests in Autumn which will definitely determine whether Greek banks need additional capital.

The Finance ministry is now expected to table a bill on behalf of the government on the recapitalization process for Greek banks, paving the way for their return to private hands which will prove they now stand on solid ground.

The government is also expected to legislate on tax reform imminently.

Athens now aims to conclude an agreement with the troika by Sunday, March 16. Talks are set to resume after the Eurogroup concludes proceedings, possible Wednesday 13th March.