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Business News/ News / World/  Greece lumbers towards next payout, may face added conditions
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Greece lumbers towards next payout, may face added conditions

Greece’s ‘troika’ of creditors sealed a staff-level accord leaving open when as much as €8.1 bn will be released

A file photo of Greek Prime Minister Antonis Samaras. Photo: AFP (AFP)Premium
A file photo of Greek Prime Minister Antonis Samaras. Photo: AFP
(AFP)

Brussels: Greece lumbered towards its next aid payout, possibly broken up into smaller instalments and tied to additional economic reforms by Prime Minister Antonis Samaras’s government.

Greece’s “troika" of creditors sealed a staff-level accord on new economic and deficit-reduction steps, leaving open when as much as €8.1 billion ($10.4 billion) will be released. Euro-area finance ministers will decide on a portion of that payout when they convene at 3 pm on Monday in Brussels.

“This morning we reached an agreement within the troika," Dutch finance minister Jeroen Dijsselbloem said as he arrived for the talks. “We are going to judge their progress. Based on that we may decide on a next tranche" that may be divided into installments if that’s “necessary" and “helpful," he said.

European governments led by Germany are continuing to keep Greece on life support, unwilling to let it go bankrupt and exit the euro while doling out aid in the smallest possible doses to avoid upsetting their own taxpayers.

Political tumult in Portugal, among the five euro countries tapping emergency aid, raised the pressure on creditors to keep Greece’s program on track. Germany, the biggest creditor, is seeking to avoid a flareup in the crisis as Chancellor Angela Merkel campaigns for re-election in September.

‘Important progress’

“While important progress continues to be made, policy implementation is behind in some areas," the troika, comprising the European Commission, International Monetary Fund (IMF) and European Central Bank (ECB), said in a statement on Monday.

The euro was little changed at $1.2843 at 11:15 am Brussels time after dropping 1.4% in the previous two sessions. The 17-nation currency may lose more ground if finance ministers don’t approve the next payments tonight, Chris Turner and Tom Levinson of ING Groep NV in London said in client note.

Interviewed on Sunday while Greece and the creditors were still in talks, European Union economic and monetary commissioner Olli Rehn said there are “reasonable chances" of an agreement on the next disbursement. “That really depends on Greece and whether it is able to ensure that all the milestones will be met," Rehn said in Aix-en-Provence, France.

Creditors’ assessment of whether Greece was entitled to the next tranche in €240 billion of loans was jolted last month by a government upheaval in Athens, in which Samaras lost one of his two coalition partners in protest of his sudden closure of the ERT state broadcaster.

Shrunken coalition

Samaras handed more prominent ministries to the socialist Pasok party, his New Democracy party’s historic rival, in the ensuing reshuffle. The shrunken coalition has 155 of the 300 seats in parliament, with Pasok’s 28 lawmakers holding the key to legislation.

The troika gave the coalition a lengthy to-do list, including “concrete steps" to control health-care overspending, income and property tax reform, and politically sensitive cuts in government payrolls, termed “mandatory exits" in Monday’s statement.

Greece has also failed to generate planned revenue from selling state assets. The latest setback came last month, when no bids came in for the national gas company Depa SA.

“The long-term problem is that the fiscal plan for Greece is entirely implausible," said Fredrik Erixon, head of the European Centre for International Political Economy in Brussels. “There’s a charade going on between the troika and the Greek government and there will be further bumps in the road regarding future bailout payments." BLOOMBERG

Paul Tugwell and Tom Stoukas in Athens, Stefania Spezzati in Milan, Caroline Connan in London and Corina Ruhe in Brussels contributed to this story.

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Published: 08 Jul 2013, 07:59 PM IST
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