IMF, EU push Greece to make more reforms
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Greece has to deliver on its promises to implement austerity measures before receiving a second round of bailout money, European Union and International Monetary Fund leaders urged at this year's World Economic Forum in Davos, Switzerland.
REUTERS - The European Union and IMF want Greece to push through more budget cuts and implement a series of long-agreed austerity reforms before they agree on a new bailout the country needs to avert bankruptcy, a report obtained by Reuters shows.
All eyes have been on Athens’ tortuous debt swap talks with its private creditors in recent weeks. EU economic and monetary affairs chief Olli Rehn injected some optimism on Friday, saying an agreement was “very close” and might be clinched as soon as this weekend.
With or without a deal with private creditors, Greece will not get the 130-billion euro package it needs to avert a chaotic default if it does not convince its euro zone partners and the International Monetary Fund that it is doing enough to implement the reforms they require in return for the aid.
“Greece has not only to commit itself, Greece has to deliver. Not all of the commitments have been fulfilled. That is one of the critical issues to confidence,” German Finance Minister Wolfgang Schaeuble said at the annual World Economic Forum meeting in Davos on Friday.
“No firewall - you can make any figure - it cannot work if the real problems will not be solved,” he said.
Athens’ partners have grown increasingly exasperated with its repeated fiscal slippages and delays on reforms and want to see progress before they wrap up Greece’s second multi-billion euro bailout in three years.
Looming elections which could take place as early as April are distracting politicians and senior officials from enacting the unpopular austerity reforms, sources close to the talks say.
Greece’s partners are worried about whether a new government would stick to reforms and Schaeuble has said all parties must commit to the reforms, no matter who wins the election.
Antonis Samaras, whose party shares power in the coalition government with technocrat Prime Minister Lucas Papademos, has slammed the current policy mix, saying it risks plunging Greece even further into crisis. He wants elections by April 8 at the latest.
Far-right leader George Karatzaferis, whose party belongs to the coalition government, said on Friday that Greece’s lenders should not push the country too far, particularly by asking all of its party leaders to put excessive demands in writing.
“No-one should expect a signature of subservience,” Karatzaferis said in parliament. “Yes, we assume our obligations but we will not bow to ultimate disgrace.”
Budget cuts, pension reform
The EU, IMF and ECB lenders - known as the troika - have drawn up a report which includes a list of measures they want to see enacted by Athens.
Top of the list is passing a supplementary budget with more cuts to reach fiscal targets in 2012. The troika suggests large spending cuts in defence and health spending as well as cutting redundant state entities. The document does not specify the amount of cuts needed.
The EU and IMF are pressing Greece to adopt a much-delayed reform of supplementary pensions, ensure that a plan to replace only 1 out of 5 civil servants leaving the workforce is enacted and want Greece to finalise the opening up of its many closed professions such as lawyers and pharmacists, which they have been demanding for years, the document shows.
They also want the Bank of Greece to complete its assessment of Greek banks’ capital shortfall and they expect the government to enact legslation to improve wage flexibility and further liberalise product and service markets, the document says.
The list of measures is not final and could change after discussions with the Greek authorities, the document says. The top EU, IMF and ECB inspectors are in Athens to discuss this.
Talks with the troika inspectors on the new bailout programme are expected to go well into next week, sources close to the talks say, with slow process so far on fleshing out reforms required by the lenders on areas such as cutting the public sector workforce and making wage rules in the public and private sector more flexible.
Government spokesman Pantelis Kapsis said the government would try to negotiate on some of the points on the list but repeated that Athens needed the bailout loan to stay afloat.
Asked if Greece would default without the aid, he told Skai TV: “It’s obvious, if we don’t get the loan, how are we going to find the money?”
But he added: “This is not what we will finally pass, we should keep that in mind. It’s a list by the troika that opens up all those issues ... Some of them are past obligations, some are up for negotiation.”
Greece and its private creditors made progress on Thursday in talks on restructuring its debt, both sides said, and they will continue negotiating on Friday with the aim of sealing an agreement within a few days. Charles Dallara, the top negotiator for private creditors, is scheduled to meet Greek Prime Minister Lucas Papademos at around 1630 GMT.
Deutsche Bank Chief Executive Josef Ackermann confirmed on Friday that private creditors have offered to take losses of almost 70 percent in the debt swap.
“We have put a very attractive offer on the table,” Ackermann, who is also chairman of bank lobby group IIF which negotiates for private creditors, told Germany’s N-TV in an interview broadcast on Friday. “Everybody needs to make a contribution.”
After weeks of wrangling over the coupon, or interest rate, Greece must pay on new bonds it will swap for existing debt, attention has shifted to whether the ECB and other public creditors have to make a contribution too.