Galery

1

The next week in Athens will see the arrival of the representatives of the supervisory Troika Matthias Mors from the European Commission, Klaus Masuch of the European Central Bank and Poul Thomsen of the International Monetary Fund to discuss with the newly formed government the changes in the economic policy, the renegotiation or update of the memorandum.

Initially it was reported that the Troika would arrive on Monday, but due to the health problems of the Prime Minister and Finance Minister of Greece, perhaps the visit will be postponed for several days until Antonis Samaras and Vassilis Rapanos are discharged from the hospital.

The visit, which will be the first after the new government took power, but also the first since the end of February, will be of political significance. As senior officials from the Ministry of Finance explained talks will be held with the new ministers of finance, labour, regional development, but most probably there will also be meetings with the Prime Minister Antonis Samaras and the leaders of PASOK and the Democratic Left Party.

Meetings with the representatives of the Troika will be the first substantive negotiations of the new government with the creditors, which will largely determine the direction and magnitude of the changes in the memorandum and will shape the national strategy and the decisions for the upcoming summit on the 28^th of June. Meanwhile it became clear that neither the Greek Prime Minister nor the Finance Minister of Greece will be able to take part in the summit. The country will be represented by the Foreign Minister Dimitris Avramopoulos and the deputy finance ministers Georgios Zanias and Christos Staikouras.

Ice breaking visit

The visit of the representatives of the supervisory Troika will be rather aimed at meeting the new ministers who will from now on take decisions on the economic programme of the government. There was a slight pause in the programme due to the election.

Examiners will request to be informed of the government's position on key issues, but will also require a report on the work completed since February up to the present moment.

Furthermore, they will request data for the economic development such as the state budget, and the GDP. Their interest will be focused on the development prospects for the coming months.

When the work of the mission is completed it will inform the management of the European Commission, European Central Bank and the International Monetary Fund, and will return in July to carry out an in depth inspection of the economy as well as an update of the Memorandum.

GDP – Employment

The Ministry of Finance will present to the Troika the nightmarish dimensions which the recession in the economy has already reached in order to convince the supervisors of the necessity of adopting measures for development.

In addition to the known decrease of the GDP by 6.2% in the first quarter of 2012, the Greek Finance Ministry will emphasize that the projections for the coming quarters are also negative since the second quarter became the "victim" of heightened uncertainty because of the election. The third quarter will also be subjected to severe tests because of the expected decline in tourism as well as the decline in consumption resulting from the reduction in disposable income of the population through the "inflated" taxes.

The increase in unemployment will be also pointed out, as in the first months of the year the number of unemployed has reached 1.1 million people, and the rate - 22%. This is a situation which is far from the objectives of the Memorandum.

The prospects for the public finances are better. There the budget deficit is smaller than expected, but there are risks. The slowdown in revenues by nearly 1 billion euro in the first five months of the year can be covered by the tax liabilities, provided however, that taxpayers pay their taxes.

Also, it is difficult for the costs, which are reduced by 2.9 billion euro as compared with the objectives, to remain at these levels without having subsequent problems in the state machine.

Assessment

The President of the Eurogroup Jean-Claude Juncker said on the occasion of the visit of the Troika in Athens, that it will evaluate the status of the Greek economy, in order to see how far the programme has come and later on there will be another mission of the Troika with the purpose of talks with the government. The aim is for the procedure to be completed before granting the next installment.

Vice President of European Commission Olli Rehn said that the mission of the Troika will assess the reform programme and fiscal consolidation. "We'll see what has been done, what hasn’t been done and what should be done", he said, noting that "the most important thing is for the reforms in Greece to begin again."

In any case, Germany's Finance Minister Wolfgang Schaeuble said in his statement that Greece must comply with the terms of the rescue programme, adding that there is no room for manoeuvre in reducing the debt to 120% of the GDP.

"Meagre" report for the first quarter

As became clear, the mission of the Troika will demand a report on work done over the last four months. It should be noted that this report is very "meagre" as due to the election no progress has been achieved in almost any of the measures in the long list of obligations. And the main ones are: