Greek bailout review completion crucial to future of the economy

Greek bailout review completion crucial to future of the economy

Athens, February 26, 2016/Independent Balkan News Agency

By Zacharias Petrou

There seems to be some confusion amongst Greek government sources as to when the top negotiatiors of the country’s creditor institutions will return to Athens to continue the review of the bailout program.

Optimistic estimates place the return of the high-ranking quadriga envoys to arrive in Athens next week to continue talks on progress made in reforms. Other sources maintain that a Euro Working Group (EWG) meeting to be held on Monday will determine whether or not the inspectors will return and when.

The Eurozone deputy Finance Ministers participating in the EWG will take stock of progress of negotiations so far regarding the course of the budget and the overall program review.

Technocrats

In any case, talks continued this week between Greek government officials and a group of the creditors’ technical experts at the Finance Ministry with.

The technocrats reportedly expressed reservations about the fiscal figures presented to them by the government. They are continuing to collect data on the execution of the 2015 budget, but their talks with Greek officials have yet to show much progress.

The main issue raised in early talks is the fact that creditors demand pension cuts are made to cover fiscal gaps in a way that “numbers add up” while the Greek side insists on tax measures.

The techocrats have questioned the effectiveness of measures proposed by Athens to plug a fiscal gap this year, the size of which has yet to be determined. The Greek side has yet to implement a series of measures and reforms included in the MoU signed last summer, such as military spending cuts and collecting tax revenue from the gambling industry.

Creditors have even opposed as ineffective a government proposal to extend until June an incentive to encourage drivers to take their old vehicles off the roads by offering them a subsidy towards purchasing of a new one.

The largest obstacle, however, remains social security reform and the depth of pension cuts needed. Greek farmers have been the most dynamic group of professionals to protest the pension reform plans of the government. However, as they have started to show signs of fatigue and some blockades have begun to gradually open, it is considered a sign that an agreement with the government may be on the cards.

Mistakes

Greece is very close to exiting the crisis as long it does not repeat past mistakes, Bank of Greece governor Yiannis Stournaras said in the bank’s annual report.

Stournaras noted that the prospect of exiting the crisis was now visible. However, he warned that we have to remain focused on adhering to the terms of the agreement in order to approach it and stressed that in no case these terms should be seen as orders by creditors but as fundamental and necessary reforms, which had to be done a long time ago.

“The Greek side must adopt the program as a necessary means of adjusting and reforming the economy,” Stournaras said.

The Bank of Greece expects that the country’s GDP will continue contracting at least until the end of the first half of 2016, due to a carry-over from 2015, but noted that there were objective preconditions to halt this recession and to reach positive growth rates from the second half of the year.