Brussels, 10/07/2013 (Agence Europe) - Greece is still making progress, although at a slow rate, in implementation of its structural adjustment programme connected with its financial aid programme, but several important actions have been delayed, explains the European Commission in a provisional progress report leaked by Reuters on Wednesday.
The report may yet be changed following action to be taken by the Greek authorities by Friday 19 July. The government is coming up against vested interests in reform of the civil service and elsewhere. The authorities failed to meet the initial objective of putting 12,500 civil servants in a mobility scheme by the end of June. The troika of lenders (European Commission, European Central Bank and International Monetary Fund) have given the country until September to achieve the target, as long as at least 4,200 officials join the scheme by the end of July. A further 12,500 should join the scheme by the end of the year.
The report says that, because some of the measures previously agreed upon have not been applied, a gap in the budget will appear in 2014. In addition to this, the cap on spending for healthcare has been exceeded and there have been delays in collecting the property tax. The troika's fact-finding mission says there are huge uncertainties about the country's budget prospects and a funding gap will emerge in 2013, despite the measures taken in May to avert it. In order to fill the gap, measures planned for 2014, like a tax on luxury products, will have to be brought into force earlier.
The Greek government was able to announce some good news on Wednesday - it has beaten its primary deficit target (not including debt-servicing) for the first half of 2013.
The disappointing progress in privatisation, failing to meet the targets for 2012 and unlikely to meet them in 2013, means that the lenders will pay some batches of aid earlier than planned. In the third quarter, the eurozone will provide €4.8 billion rather than the initially planned €3 billion. This is also due to delays in the fact-finding mission. If the Eurosystem's central banks were to be late in paying back to Greece some of the profits they have made under the SMP debt buy-back programme, then the European stability fund will have to intervene again.
It is still expected that Greece will return to growth in 2014, but there are significant risks that could lead to delays, such as instability in the coalition government.
By Friday 19 July, Athens has to implement “prior actions” if the eurozone is to agree to disburse the next sub-batch of aid (€2.5 billion). On Tuesday evening, Greece unveiled a draft law in this connection. (EL/transl.fl)