Brussels, 30/10/2012 (Agence Europe) - Greece has managed to reach agreement on the budget and a series of measures with its international lenders (the troika, in other words the European Commission, the European Central Bank and the International Monetary Fund), announced Greek prime minister Antonis Samaras in a press release on Tuesday 30 October. The Democratic Left party, Dimar, said “We don't agree with the conclusions of the negotiation.” The deal must be now endorsed by the government coalition and the country's parliament ahead of the Eurogroup meeting on 12 November this year. Despite attempts by the Greek government to water down some of the troika's demands for reform of the labour market, the troika refuses to budge.
Samaras put pressure on his partners and the country's parliamentarians arguing: “The problem from this point on is not this or that measure. The problem is the exact opposite: what would happen if the deal is not ratified and the country is led to chaos, (and how much more painful such a development would be for the Greek people; from an economic standpoint and -- more importantly -- from a political standpoint). These dangers must be averted, and this is now the responsibility of all the parties and each individual deputy.” On Wednesday, Greek finance minister Yannis Stournaras will submit the draft budget for 2013 to the Greek parliament a few hours ahead of the videoconference of eurozone finance ministers. A European source said that Eurogroup would be discussing progress made with the troika and the affordability of the Greek debt, but no decisions were likely to be taken. Depending on the outcome of Wednesday's meeting, another special Eurogroup meeting may take place on Thursday 8 November.
Under its second bailout package (see EUROPE 10558), Greece is required to introduce a further round of savings, to the tune of €13.5 billion, in order to meet its budget commitments for 2013 and 2014. It hopes to be given two more years to meet these commitments, as Samaras promised in the recent elections. Other reforms include a 22% cut in minimum pay in the private sector and 15,000 redundancies in the public sector (slimming it down to 150,000 by 2015). Privatisation is expected to net €20 billion by 2015, which will be quite a challenge. The fight on tax evasion and fraud is paying off, achieving nearly €1 billion in 2011 according to the Commission's task force, but is clashing with political resistance as was seen by the so-called loss of a CD by the Greek government containing the details of 2,000 holders of Swiss bank accounts and the arrest of a journalist who had published the list. Before it can be certain it will be granted the next instalment of aid, Athens must endorse 89 priority measures, application of which is demanded by Eurogroup (see EUROPE 10706). In return, Greece's international lenders have earmarked aid of €130 billion (€28 billion of which is from the International Monetary Fund) from the eurozone bailout funds, the EFSF and ESM. Private owners of Greek bonds recently accepted a “voluntary” writedown (53.5% of face value) in order to reduce Greece's debt from 160% of GDP to 120%. This partial writedown was the biggest measure of this type ever. Greece's public lenders have agreed to reduce the interest rates charged on the loans under the first and second bailouts. From March to June 2012, €75.6 billion (including €1.6 billion from the IMF) was disbursed. Some €73 billion was granted in bilateral loans under the first Greek bailout, €20 billion of it from the IMF. (MB/transl.fl)