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Ten days of agony for the final decision

07 October 2012 / 12:10:02  GRReporter
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The Greek state will try to conclude the agreement with the Troika and to vote the measures by the summit of the European Union on 18 to 19 November. The desire of the Greek Finance Minister Yiannis Stournaras is for the Troika to inform the finance ministers of the euro area, at tomorrow's meeting of Eurogroup, that significant progress has been made in the talks, something that will be published in the communiqué of the meeting and will put the issue on the agenda of the Summit. According to senior government sources, it will be disastrous if the Greek Prime Minister and the Troika appear before Eurogroup with differences in the programme. According to the same sources, the package of measures has not been prepared yet and the aim is for the Troika to have a clear and a positive opinion about the economic programme at tomorrow's meeting. Stournaras will remain in constant contact with the Troika over the coming days, both tomorrow in Luxembourg and at the meeting of finance ministers of the euro area, as well as after that. On Tuesday, the Troika is returning to Athens to continue the negotiations, and Yiannis Stournaras is going to Tokyo for the annual meeting of the International Monetary Fund.


There is information that the larger part of the 13.5 billion euro package of measures has already been prepared and the two sides are close to reaching an agreement. As time is pressing, the economic headquarters has announced that they cannot afford to waste any more time. And this is a clear message in all directions, political leaders included.



An indication of the criticality of the situation is the phone call of French Finance Minister Pierre Moscovici to Yiannis Stournaras, advising him to do everything possible to speed things up so that the negotiations with the Troika are completed. Moscovici's reasoning is that Greece should benefit from the improved climate because if there is a delay, this climate will change completely. According to the sources, if the initial intentions are abandoned, more people in the eurozone will think that Greece's funding should stop and that the country should exit the common currency area.

This week's talks with the Troika experienced many difficulties, too. IMF representative Poul Thomsen urged that painful austerity measures amounting to 2.5 billion euro in 2013 be imposed, expressed his concerns that the debt would remain, and talked about the need for additional funding to fill the gaps of the programme. Precise schedules of commitments under the Memorandum were requested. There were disagreements in the discussions, too - for example on the draft budget about which the Troika doubted the government's forecast for a decline of 3.8% in 2013, predicting that it will be 5%.

According to sources from the Ministry of Finance, who participated in the negotiations in March, the government has voted in parliament a programme of measures amounting to 7.8 billion euro next year, and it is on this basis that the decrease of 3.8% has been obtained. It is clear that when the partners offer various measures this decrease will be greater. Consequently, the percentage is higher because there are more measures required by the partners.

In recent days, the climate has changed after the concessions made by both sides, and an agreement on further measures in 2013 has been reached. Initially, the Troika required 2.5 billion euro but these measures are now reduced to 1 billion euro. Thus, the overall package to cut costs in 2013 reached 9 billion euro from the initial 7.8 billion, provided by the draft.

 Greece is insisting that the final contract includes a clause for balanced measures, and it seems that the country will be able to achieve this. This means that in the event that during the implementation of the programme tax revenues higher than those expected appear, then the painful cuts will be taken out of the package of measures, and if there is a shortage, new measures with new cuts in wages, pensions and public services will be added.


Tags: package of measures Troika Stournaras Paul Thomsen Pierre Moscovici
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