Review of Greek bailout program gets underway

Review of Greek bailout program gets underway

Athens, October 22, 2015/ Independent Balkan News Agency

By Zacharias Petrou

The “quadriga” of Greece’s creditors is in Athens for talks.

Negotiations began formally on Wednesday and will last until Friday, focusing on the reform commitments and the state of the country’s finances, with all the issues of the bailout agreement set to be scrutinized.

The first meeting held involved Finance Minister Euclid Tsakalotos and State Minister Alekos Flambouraris, focusing on the reforms that Greece must implement to unlock 2 billion euros of its rescue loans.

A second meeting in the afternoon focused on financial and fiscal affairs, the budget for 2016 and tax matters in which Alternate Finance Ministers Giorgos Chouliarakis and Tryfon Alexiaidis were present. Furthermore, Economy Minister Giorgos Stathakis discussed the issue of non-performing loans (NPLs) and indebted households in a separate meeting with the creditors. The two sides reportedly appeared to have very different views on the value a home must have in order for its owner to qualify for protection from foreclosure.

During their stay in Athens the creditors will evaluate progress in the implementation of the program and prepare a road map of prior actions the government will have to implement fully by next week in order to receive 2 billion euros at the end of October. Also, the offsetting measures proposed by the Greek government will be assessed and the process of recapitalizing the banking system will be put on track.

Greece has so far not implemented the agreed prior actions in their entirety. In fact 70% of them have yet to be implemented (only 16/49 measures have been delivered) with most of the remaining measures are still waiting for decrees or circulars from the ministries which almost certainly means the disbursement of the 2 billion euro bailout tranche will be delayed.

Contentious issues still open include taxing farmers, raising tax for private education and merging pension funds.

Presenting the draft budget for 2016 to Parliament’s Economic Affairs Committee on Wednesday, Finance Minister Euclid Tsakalotos predicted that concluding the review will liberate this “repressed demand” in the economy but admitted that the draft budget contained several grey areas and that the strategy for an exit from the crisis was “full of uncertainties” that were exacerbated by the state of the European economy.

Meanwhile, Alternate Finance Minister Giorgos Chouliarakis who also spoke in Parliament, expressed optimism that fiscal data will be improved and will give the government the chance to redistribute funds on social measures.

An expected contraction of the Greek economy this year and in 2016 could be smaller than official estimates, the Centre of Planning and Economic Research (KEPE) said on Wednesday.

In a report, KEPE said that an economic recession next year could reach 1.3 pct although further analysis of data was necessary to reach a safer estimate, an announcement said.

Meanwhile, the country’s current account surplus widened in August from the same month a year earlier, mainly due to a smaller balance of goods deficit as a result of lower imports, the Bank of Greece said on Wednesday.