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The Troika gave two-week’s grace to Greece to clear up the mess

02 September 2011 / 16:09:44  GRReporter
3413 reads

Victoria Mindova

The supervisory Troika gave a delay to the Greek government after a week of inspections and negotiations that have not resulted in anything specific. The mission of the International Monetary Fund, the European Central Bank and the European Commission will be back in Athens on September 14 this year to see what the government has achieved in the area of ​​structural reforms and growth. Until then, the government of George Papandreou will have to be ready with the first version of the 2012 draft budget.

The Minister of Finance Evangelos Venizelos has denied any breakdown in the relations between Greece and the supervisors. He said the cut off the mission was planned from the outset of the visit. Hours after the news broke in the Greek media the IMF changed the date of approval of the next amount of aid from September 15 to September 27 this year. The message says that the meeting for approving the tranche should be postponed because the report of the head of the Troika Poul Thomsen would not be ready. Initially, the fifth inspection of the Troika had to be completed in the first ten days of September, and then a report on the development of the Greek economy had to be prepared and to decide, based on that report, on the allocation of the next tranche of the aid, which this time is estimated at about € 8 billion.

"The issue for the payment of the sixth tranche of the financial aid will be decided when it should be," replied evasively the Minister of Finance Evangelos Venizelos to the question "When will Greece know whether it will receive the tranhce from the International Monetary Fund and the European institutions?" Venizelos was unable to give a specific answer, which only confirms the assumption that the Troika is extremely dissatisfied with the holes in the implementation of the recovery program and if the tranche is obtained it will be after a political decision.

Venizelos denied that the Troika has requested additional measures and explained that they discussed different ideas. The most important issues of supervisors’ concern are the compliance with the long-term fiscal objectives and the options for reorganizing the local economy. However, they can not be met because the reforms are lagging behind, the recession is deepening and Greece is not keeping its obligations under the contract for preferential financing.

The prospects to reduce the budget deficit within the agreed values by the end of the year seem unattainable, but the Minister of Finance refused to give a specific answer what its levels are now. "It is as important to have a specific estimate of the value of the deficit now, as to have such a reliable estimate of its value by the end of the year," said Venizelos sagely like Yoda from George Lucas’ Star Wars. To make it clear, he added that the government has another four months to catch up to August.

Evangelos Venizelos denied that the government blames the recession for all its troubles in implementing the economic program. Apparently, he has very short memory, because only last week the Minister of Finance told local bankers and businessmen that the recession is the only obstacle to the proper implementation of the recovery program. "We will not continue to apply measures that deepen the crisis," said Venizelos, which could be taken as a promise that finally the government will take over the costs cuts in the budget. However, the Minister of Finance denied any option to resort to direct redundancies in the public sector. Instead, the government has imposed the introduction of a labour reserve, from which the redundant staff of state-owned enterprises will receive 60% of their salary for about a year.

Tags: EconomyMarketsGreeceVenizelosTroikaSupervisorsInspectionsBudgetPostponing
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