EU/ IMF inspectors discuss bailout with Greek finmin

Greece's new finance minister met EU and IMF inspectors on Thursday in an effort to iron out differences over a new bailout program, with local media saying the lenders had rejected changes requested by Athens.

By (Reuters)

Published: Thu 23 Jun 2011, 4:03 PM

Last updated: Tue 7 Apr 2015, 4:51 AM

Efforts to impose painful new austerity measures -- after an existing 110 billion euro ($157.5 billion) bailout for Greece proved insufficient to keep the country afloat -- kindled a revolt last week inside Prime Minister George Papandreou's Socialist party (PASOK), forcing him to reshuffle his cabinet to stiffen resolve.

The cabinet on Wednesday approved a draft law to implement the austerity plan but must still get parliamentary approval next Tuesday to secure a new European Union-International Monetary Fund bailout believed to be worth 120 billion euros.

Slovak Prime Minister Iveta Radicova said Papandreou had expressed serious doubts during a telephone call that parliament would pass the package.

New Finance Minister Evangelos Venizelos, a powerful senior figure in PASOK, has tried to appease street demonstrators and Socialist legislators with promises to make taxes fairer.

Venizelos met the EU-IMF delegation early on Wednesday before heading for talks with a group of PASOK legislators to try to secure their backing. He was due to resume discussions with the "troika" of inspectors from the EU, IMF and European Central Bank later in the day, officials said.

A Greek finance ministry official told Reuters earlier this week that troika officials had expressed reservations about some of the measures proposed by Athens.

"They still need to reach agreement on a number of last minute issues on the medium-term plan with the troika," said economist Platon Monokroussos at EFG Eurobank.


Greek newspapers reported, without giving sources, that the EU-IMF mission had spurned Venizelos' proposal to avoid lowering the income tax threshold by implementing a special one-off levy on higher earnings ranging between 1 and 3 percent of income.

All night thriller with the troika," headlined the Kathimerini newspaper, reporting that despite tough negotiations the mission found the government's proposals "inadequate."

Papandreou's government is racing to approve the five-year austerity package before the end of June despite widespread public resistance and daily protests.

The EU and IMF have made its passage a key condition for disbursing the next 12 billion euro tranche of funding, which is essential for Greece to avoid bankruptcy next month.

Failure to negotiate new funding would push Greece into the euro zone's first sovereign default and send shock waves through the global financial system.

With Greece's debt-laden economy in the grip of its worst recession in 37 years, many ordinary Greeks complain that plans to lower the minimum income tax threshold below 12,000 euros a year would leave them without enough to survive.

One key factor in Greece's fiscal crisis has been rampant tax evasion, which international lenders have pressed Athens to crack down on. The average annual salary is about 20,000 euros.

Papandreou received a boost in the early hours of Wednesday when he won a confidence vote with the solid backing of all 155 Socialist party legislators in the 300-seat parliament. The conservative opposition voted as a bloc against the government, despite appeals from EU partners for national unity.

European leaders were expected to discuss the Greek crisis at a summit in Brussels on Thursday and Friday.

Even if Papandreou secures a new program, many economists believe that, with Greece laboring under some 340 billion euros of debt -- or 30,000 euros for each of its 11.3 million people -- a default is increasingly likely.

More news from Business
In-store shopping regains trust


In-store shopping regains trust

What is happening now is that as Covid-19 cases continue to decline, residents are regaining confidence in in-store shopping. This is according to a Kearney study in which UAE respondents cite convenience (51 per cent), enhanced shopping experience (49 per cent) and competitive pricing (44 per cent) as the main motivators driving them back to brick and mortar stores

Business3 days ago