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Greece will remain under the supervision of the International Monetary Fund, the European Central Bank and the European Commission for more than three years. This is stated in Morgan Stanley’s report which estimates that the financial support prolongation reduces the risk of crisis deepening. It also ensures that the debt of Greece will be redeemed without threatening a member state of the Eurozone with bankruptcy.  

Morgan Stanley analysts estimate that the success or failure of European economies is directly linked to how well they manage to control their costs. It is stated in the report that it is unlikely Greece and Ireland to stabilize their external debts if their governments had to settle on international markets at current levels of return. Financial analysts recognize that in the case of Greece, the country should have a primary budget surplus of around 14% of GDP to cope alone - a scenario that is not feasible in the current economic situation. Morgan Stanley concludes that other countries will benefit from the financial stability program formed in the Euro area with the support of the International Monetary Fund to secure liquidity. This perspective implies that the support of the supervisory Troika in the country will continue in the long term, not just in the next three years.  

Meanwhile, Greece is continuously working to obtain the third tranche of the € 110 billion support. The country should be paid the next nine billion euros in late November which will ensure pensions and salaries payments in the public sector and will cover a large portion of the state operating costs. The members of the IMF, the ECB and the EC mission are on a visit to Athens this week to prepare, together with the Greek authorities, the final 2011 budget.

Representatives of the Fitch ratings agency came to Greece too. They will visit the Ministry of Finance, the Bank of Greece and the Audit Court to determine what will be their next assessment of the economic development of the Mediterranean country. Fitch was the first to put Greece in the ‘junk’ (BBB-) category and their visit will determine whether the country will emerge from this category. The leader of the rating agency mission in the country Chris Price's view is that the biggest problems relate to the costs of the public sector, transport and health care system. He stated that if the deviations in the program to reduce the budget deficit were 0.1% -0.2% from the Memorandum of financial support provisions this will not adversely affect the assessment.

The leaders of the Mission Poul Thomsen (IMF), Servaas Deroose (EC) and Klaus Masuch (ECB) will arrive in the Greek capital in the beginning of next week. They will be introduced on November 15 to the latest data concerning the financial consolidation processes in the country (including the 2009 deficit). Three days later, the Greek government will announce the final fiscal plan for the next year.

An action plan for solving the current problems of the local economy should be prepared before that. Results to October inclusive show that Greece is lagging behind in collecting tax revenues. So far, the Treasury collected about two billion euros less than the earnings estimated and this makes the implementation of the obligations under the Memorandum of financial support more difficult. For a week the government, together with the supervisory mission of the Troika, should find a way to fill this gap by the end of December 2010. The burning issues like the VAT increase, the equal excise duty on heating and transport fuel, the public sector wages reduction and further liberalization of the market and the closed professions should be also solved. There is pending a series of privatizations of state enterprises to release the budget of unprofitable companies.

All these will inevitably encounter social resistance but their implementation is part of the recovery plan for the Greek economy and should not be delayed. The Ministry of Finance will undertake the next year to reform tax departments to improve their activities on both the administrative level and in the successful fight against rampant tax corruption. The last report of the Troika noted that the Greek government has done little to collect tax fraud and uncollected payments. George Papandreou’s first step after taking the power was to introduce a tax amnesty for the 2001-2009 period, thus closing a page from the past and accumulating around € 1,6 billion until the end of 2011. Specialists, however, fear that if tax services are not immediately reformed, tax amnesty will remain the only solution to the tax revenue collection in the long run.