EU-IMF bailout inspectors prepare for summer in Athens
By Sarah Collins | Monday 16 July 2012
A troika of European Commission, European Central Bank and International Monetary Fund officials is set to spend a summer in Athens working out how to get the Greek bailout programme back on track. According to the Commission, officials will return next week and will likely stay until August to make sure their work is completed.
Greece has to make good on over €3 billion in cuts and tax rises promised in exchange for a second bailout worth €174 billion and agreed in February. The programme has fallen behind as political infighting and opposition to the cuts and tax rises outlined in February grew, and the government was overturned, leading to inconclusive elections in May, followed by a re-run of the vote in June. Greece now needs to outline over €11 billion in cuts for 2013 and 2014 to qualify for further aid, which it needs in August to cover a €3.1 billion bond repayment. The government could also raise short-term cash in financial markets, but it pays a massive premium to do so.
The government is keen to secure an extra two years to complete the bailout programme, which includes mass public layoffs, privatisations, an overhaul of labour and retail markets, tax collection and the legal system, and a commitment to reduce the government deficit to below 3% by 2014. Greece’s President, Karolos Papoulias, submitted a request to extend the deficit deadline at a June European summit. New Finance Minister Yannis Stournaras told his eurozone counterparts at a Eurogroup meeting, on 9 July, that he would stick to the cuts and reforms outlined in February, while ministers said that “appropriate solutions” would be found to help Greece meet its August debt repayment. They are due to hold further talks on a possible extension of the deficit deadline in September, once the troika report has been finalised.