Greece’s creditors back in Athens as bailout draws to close

ATHENS

Greece’s creditors were back in Athens on May 16 to tie up the loose ends of an agreed program of reforms as the country’s third and final bailout comes to an end.     

With a meeting of eurozone finance ministers set for June 21, teams of experts from the EU, the ECB and the IMF were scheduled to meet with the Greek government to discuss its privatization drive, an overhaul of the civil service and the deregulation of the state-dominated energy market.

“We want to reach agreement in June for a clean exit from the program, an exit not accompanied by a precautionary credit line,” government spokesman Dimitris Tzanakopoulos said on May 15.

The creditors’ attention will focus on the continued supervision of Greece’s fiscal adherence, which Greek Finance Minister Euclid Tsakalotos has termed “enhanced surveillance.”

While assessments have taken place every six months in other post-bailout countries, monitoring visits are likely to be more frequent in Greece’s case, Tsakalotos told the Financial Times last month.

In a growth plan put to eurozone finance ministers in April, Athens has reportedly pledged to keep its primary budget surplus -- the balance excluding debt payments -- at 3.5 percent of output until 2022.

In turn, Athens wants to reduce taxes, increase social spending and gradually increase the minimum wage.

“As we are constantly exceeding primary surplus (targets), at some point austerity relief measures need to be discussed,” Tzanakopoulos said.

“Exceeding the targets every year by 1.0, 1.5, 2.0 percent works against growth,” he said.

Greece, which has been bailed out three times, is also hoping for further debt relief from its creditors, through options including longer maturity dates, interest rate freezes and the return of profits from Greek government bonds held by European central banks.

The European Union has made clear that Greece will remain under supervision until 75 percent of its debt to institutional creditors has been repaid.

Bailout loans provided by the eurozone states and IMF prevented Greece from crashing out of the single currency. However, they resulted in the country’s debt remaining at an unsustainable 180 percent of its annual economic output.

France has called for extending Greek loans by 12 years and capping interest at two percent, thereby reducing repayment by 18 billion euros.

But Germany reportedly wants to set strict conditions for any further debt relief, even though Athens has repeatedly exceeded budget goals set by its lenders.