Creditors to decide if Greece has done enough for aid
Representatives of the troika of creditors - the European Commission, the European Central Bank and the International Monetary Fund - came to determine whether the Greek authorities have made sufficient progress with their economic overhauls to justify the release of the next instalment of aid for the country.
But before talks between the creditors and Greek officials began on Monday, news reports suggested that the lenders planned to release only part of the next instalment of aid rather than the full €8.1 billion, or $10.6 billion, in order to keep pressure on Athens to deliver on its pledges.
The IMF might have to suspend loan payments to Greece if the authorities are unable to cover a funding shortfall. The organisation's rules dictate that governments must have at least 12 months of financing secured to receive bailout money.
Reports cited a leaked document, purportedly sent by the troika to Greek officials, suggesting that the government might have to make fresh spending cuts if it fails to collect adequate tax revenue and close a funding shortfall of around €1 billion. Neither the government nor troika officials would comment on the news reports.
Prime Minister Antonis Samaras, who saw his government's majority in the 300-seat parliament shrink to just three members after the withdrawal of the junior partner in the coalition, the Democratic Left, has insisted that no more austerity will be imposed.
In a speech to a congress of his conservative New Democracy party on Sunday, he emphasised the need for unity to ensure that the "unbelievable sacrifices" of the Greek people had not been in vain. Two lawmakers who had left the party returned to its ranks on Monday, bringing the government's majority in parliament to 155.
Athens is set to miss a July 31 deadline to move 12,500 civil servants into a "mobility" program for a year, during which they will receive reduced wages before their status is reviewed. New administrative reform minister Kyriakos Mitsotakis, regarded as the most pro-reformist cabinet member, plans to ask for a two-month deadline extension.
Frequently Asked Questions about this Article…
Representatives of the troika—the European Commission, the European Central Bank and the IMF—are in Athens to assess whether Greece has made enough progress on economic overhauls to justify releasing the next instalment of bailout aid.
News reports cited in the article suggest the lenders planned to release only part of the €8.1 billion instalment rather than the full amount, as a way to keep pressure on Athens to deliver on reform and revenue targets.
Yes. The IMF may have to suspend loan payments if Greek authorities cannot cover a funding shortfall. IMF rules require governments to have at least 12 months of financing secured to receive bailout disbursements, which is a key condition investors often watch.
Reports referenced a leaked troika document suggesting the Greek government could face fresh spending cuts if it fails to collect adequate tax revenue and close an estimated funding gap of around €1 billion.
Mass layoffs at state broadcaster ERT triggered a political crisis that led the junior coalition partner to quit, shrinking the government’s majority. That instability complicates negotiations with creditors and the implementation of agreed reforms.
Athens is due to move 12,500 civil servants into a one-year “mobility” program, during which they receive reduced wages before their status is reviewed. The government is set to miss the July 31 deadline and the new administrative reform minister plans to request a two-month extension.
Kyriakos Mitsotakis is the new administrative reform minister described in the article as the most pro-reformist member of the cabinet. He plans to seek a two-month extension for the civil service mobility deadline, a detail investors tracking reforms should note.
Watch troika assessments of reform progress, any partial versus full disbursement of the €8.1 billion instalment, IMF funding-rule developments, reports about potential €1 billion shortfalls or fresh spending cuts, and political stability in Athens—all of which can affect Greece’s funding outlook.
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