Brussels, 02/09/2011 (Agence Europe) - On Friday 2 September, the European Commission, the European Central Bank and the International Monetary Fund suspended their fifth fact-finding mission about the Greek budget and economy, officially to give the Greek government more time to complete certain technicalities now that the recession statistics have been revised upwards. In a joint press release, the three creditor bodies stated: “The mission has made good progress, but has temporarily left Athens to allow the authorities to complete technical work, among other things, related to the 2012 budget and growth-enhancing structural reforms. The mission expects to return to Athens by mid-September, when we expect the Greek authorities to have completed the technical work, to continue discussions on policies needed to complete the review.” The experts are expected to return to Athens in a fortnight's time to continue the negotiations. The EU and the IMF will use the interim report of the fact-finding mission to decide whether to release the next batch of financial aid, some €8 billion (part of the first Greek bailout), unless the second bailout is up and running by the end of September.
Greek Finance Minister Evangelos Venizelos shrugged off comments in the Greek media that the suspension of the mission was due to a spat between Athens and its creditors about the need for new austerity measures in order to meet the budget commitments. He said the talks had been very friendly and creative, but admitted that the economy would shrink by some 5% in 2011, rather than the forecast 3.5%. He said it would be foolhardy to count on a return to growth in 2012 and therefore there would be an automatic re-assessment of the country's debt as a result of the deepening recession. The Greek media report that the country's deficit will be between 8.5% and 9% of GDP in 2011, rather than the 7.5% set out in the structural adjustment programme. It was 10.5% in 2010.
Venizelos said he would prefer the next batch of aid to come from the second bailout, explaining that the country's financing needs would definitely be covered and guaranteed but he would prefer to borrow the cash at the lower interest rate that applies to the second bailout. On 21 July, eurozone countries decided to lower the interest rates on loans from the EFSF bailout to Ireland, Portugal and Greece.
Collateral. In parallel, the talks on Greece granting guarantees about the repayment of loans are advancing well and will continue in Brussels next week among national treasury directors. Dutch Finance Minister Jan Kees de Jager said that he expected a solution to be reached very shortly, adding that fair treatment of creditors was possible. The German, Finnish and Dutch finance ministers will be meeting on Tuesday 6 September. The agreement between Finland and Greece about the lodging of several hundred million euros in a special bank account by Greece to ensure Finland's section of the second EFSF bailout has fallen by the wayside, explained Irish Finance Minister Michael Noonan to an Irish parliament committee. (M.B./transl.fl)