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12,000 layoffs for the next 8 billion euro tranche

22 June 2013 / 20:06:49  GRReporter
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In the coming days Finance Minister Yiannis Stournaras will negotiate the next tranche amounting to 8.1 billion euro and the focus of discussions will be 12,000 civil servants who will be made redundant in collaboration with the responsible Ministry. It is not known who the new Minister of Administrative Reform will be, following the recent political turmoil that led to the resignation of Antonis Manitakis.

On Thursday and Friday, Stournaras will participate in Eurogroup and Eco-fin’s meetings in Luxembourg, in the midst of the dramatic political events that are happening in Greece. The Minister assured partners that Greece will continue meeting its obligations.

"The country has significantly delayed the restructuring of the public sector and in particular the movement in terms of public officials," said Stournaras in Luxembourg, emphasising the cuts of 12,000 employees. On Friday morning, the minister confirmed in front of Eco-fin the government's desire to meet the four-year plan and continuation of reforms.

Schäuble is coming; there is pressure from the IMF

Germany’s Minister of Finance Wolfgang Schäuble wished a quick exit from the impasse. He will visit Athens in the period between 15 July and 20 July. In Washington, IMF’s Director of the Communications Department (COM) Gerry Rice issued a declaration to Athens warning that the next tranche might not be transferred if the Troika does not complete its evaluation of Greece by the middle of July. The warning concerns Europe, too since the gap in funding has to be filled in the second half of 2014. This gap appeared following the refusal of the central banks of the Eurozone countries to enter into an agreement for the conversion of Greek bonds that they have bought in recent years – an obligation they undertook in Eurogroup in December 2012. These bonds amounted to 2.1 billion euro in 2012 and a total of 3.7 billion euro in 2013-2014.

The next goal includes privatisation revenues amounting to 2.6 billion euro in 2013. Following the unsuccessful sale of the gas company, the government wants a part of this goal for 2014.

A window for the debt

Eurogroup’s meeting discussed the agreement for the immediate recapitalisation of banks under the European Stability Mechanism (ESM) and the new banking framework. Eurogroup agreed that national governments will have to support the bank recapitalisation with 20% and the ESM - 80%. The ESM will continue to support banks only after other bail-in and state support options have been exhausted.

Greece’s recapitalisation will be decided depending on the circumstances and by a common agreement of Eurogroup, which will open an opportunity for Greece for the reduction of its debt in April 2014, as Eurogroup’s President Jeroen Deyselblum mentioned in April in Athens. It is noted that Greece has borrowed 50 billion euro for the recapitalisation of banks.

Meanwhile, the Athens Stock Exchange was also shaken. It recorded losses amounting to 6.11%, stepping back by 830.01 points following the political events and Democratic Left’s withdrawal of its involvement in the government.

The weakened parliamentary majority that will support the government in the future - New Democracy and PASOK – is worrying investors and the market, bearing in mind outstanding reforms in the public sector, which were the main cause of the current crisis.

Next week, on 25 June and 26 June, Eurobank will organise an International investment forum in Athens, with the participation of 23 major international investment houses managing capital amounting to 3.5 billion dollars. The forum has been organised for the second time at the initiative of the bank’s Executive Director Nikos Karamouzis and is attracting great interest among investors.

Within the forum, representatives of investors will have the opportunity to get acquainted with the latest development in the Greek economy and specifically with the course of the privatisation programme, envisaged reforms, possibilities for investments, events in the credit system and the country’s strategy for exiting the crisis. During the first day, Finance Minister Yiannis Stournaras will describe the Greek economy’s progress and governor of the Bank of Greece George Provopoulos will be the official spokesman at the dinner that day.

Minister of Development Kostis Hatzidakis will be official spokesman at the forum’s closing on the second day. Statements of SYRIZA’s representative Professor George Statakis and PASOK’s Filippos Sahinidis are anticipated with great interest. Bob Traa, Senior IMF Resident Representative in Athens will be an official guest. The forum will host speeches by Hellenic Financial Stability Fund Chairman Christos Sklavounis and Executive Director of the Fund Anastasia Sakellariou, Chairman of the Privatisation Agency Stelios Stavridis, President of the Union of Greek tourism enterprises Andreas Andreadis and Eurobank’s financier Platon Monokroussos.

Presentations of 14 major Greek companies of the most important sectors of the economy are also provided at private meetings with investors. The main purpose of the meetings is the presentation of prospects and investment plans of companies in order to facilitate international capital’s access for the finance of business plans of Greek companies.

Tags: Yiannis Stournaras cuts in the public sector the Athens Stock Exchange investment forum
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