Brussels, 01/09/2014 (Agence Europe) - Two days of talks will begin at the OECD headquarters in Paris on 2 September between the Greek government and the troika of lenders (European Commission, European Central Bank and International Monetary Fund) ahead of a formal troika mission due to begin in Athens in mid-September.
“The aim of the Paris meetings is not to discuss how the financing needs of Greece will be covered beyond 2014 or to address issues of debt sustainability - these will be discussed later in the autumn in the context of the review, after a staff level agreement on the forthcoming review is reached, and within the framework set out in the Eurogroup statement of 27 November 2012”, the troika says. The aim of the talks is to prepare the ground to avoid the mission being strung out over a long period of time, as has happened in the past. The troika “hopes the meeting will contribute to streamlining the actual review and making sure that it is clear for the Greek side on which issues they have to deliver”.
One external factor may influence the timetable, however, because, in the second fortnight of October, the results of the assessment of European banks will be published and it remains to be seen how this will impact on the sustainability of the Greek debt and the country's financing needs.
Later in the year, the eurozone will face the pledges it made in November 2012 to reduce the Greek debt once a primary budget surplus has been achieved (not including debt servicing costs) as long as Greece keeps its commitments. The latest analysis of the debt trajectory reveals a slight worsening because the latest provisional growth figures released on 1 September reveal a recession of 0.3% in the second quarter compared with the second quarter of 2013, following a recession of 1.1% in the first quarter. The government hopes growth will return in the third quarter. The figures released on Monday show that the recession in Greece stood at 0.7% in the first quarter of 2014, but the government forecasts growth of 0.6% of GDP for the year as a whole.
The Paris meeting is the first of its type between Greece and the troika and aims to ease the tension that was generated in Athens during previous troika missions. Despite comments by a number of ministers, Greece is not yet prepared to consider a third bailout. Reuters a preventative credit line from the European stability mechanism is being considered. In an interview in the New York Times, Greek Finance Minister Gikas Hardouvelis said: “Greece has done most of the reforms; the next phase is to solidify them, to make sure they don't reverse”.
Greek newspaper Kathimerini says that members of the Greek government will have three objectives when they arrive in Paris; - convincing the IMF to release its aid instalment ahead of the release of the results of the bank stress tests; - convincing the troika that there will not be a budget gap in 2015 and that a tax cut is possible; - and reducing the list of 600 prior actions that still need to be implemented. (EL)