Envoys for Greece’s international lenders have extended their mission to Athens indefinitely, a Finance Ministry official said Sunday, and now plan to stay “as long as necessary” to help government leaders complete a “credible package” of budget savings.
The leaders of Greece’s fragile coalition government met last week to try to finalise measures to achieve Euro 11.5 billion in budget savings for 2013 and 2014 but failed to reach an agreement.
The so-called troika of lenders — the European Commission, European Central Bank and the International Monetary Fund — have extended to Greece two loan deals worth Euro 240 billion, or $295.7 billion at the current exchange rate, over the past two years but have expressed frustration at the Greek authorities’ slow implementation of overhauls they had promised to make in return for the aid. The leaders of Greece’s fragile coalition government met last week to try to finalise measures to achieve Euro 11.5 billion in budget savings for 2013 and 2014 but failed to reach an agreement. The officials were set to meet again Monday to decide on the package, which is necessary for Greece to continue receiving future installments of aid from the troika.
Reluctant to impose more cuts on citizens weary after more than two years of austerity, Greek officials are seeking to avoid further reductions to pensions and social benefits, but there appear to be few alternatives.
The IMF’s envoy to Athens, Poul M Thomsen, told the Greek finance minister, Yannis Stournaras during a dinner Friday night that “we want to help, and we will stay as long as it takes to prepare the package,” said the Finance Ministry official, who was not authorised to comment publicly on talks that were continuing.
The ministry official said the climate of the talks has been “extremely positive.” Officials from the troika, who arrived in Athens on Thursday, did not respond to requests for comment on the Greek official’s assertion, although Thomsen said Thursday that he was “satisfied” with the progress of the talks. The lack of progress by the Greek authorities in adopting promised reforms and budget measures has prompted calls by some European Union officials for Greece to leave the Euro zone.
The troika’s representatives had been due to leave Athens at the end of July and return at the end of August to complete their review of the government’s finances. Their reported change of plans has fueled Greek hopes that a decision on the release of the next Euro 30 billion installment of rescue aid will be made sooner rather than later. Without the aid, it is unclear how Greece will repay a Euro 3.2 billion bond that comes due August 20, although EU officials have indicated that a solution will be found to cover that debt.
Prime Minister Antonis Samaras has emphasised that austerity without measures to promote economic growth will only plunge the country further into recession. The economy is expected to contract 7 per cent this year. Samaras has pledged a bold program to privatise state-owned assets, but few details have been revealed.
Stournaras struck a similar note in an interview with the daily newspaper Kathimerini on Sunday, calling for “privatisations, the opening of closed professions, the improved absorption of European structural funding, the use of funds from the European Investment Bank and the acceleration of the process of issuing licenses for investors.”
This mix of policies can put Greece back on the road to recovery, he said, but not any time soon, he said. “The road will be a long one and demands patience and persistence in order for the lost ground to be regained,” he said.
© 2012 The New York Times News Service
