Next aid pay­ment not a done deal

Troika says 5th pay­ment to Greece may have to wait; re­ces­sion proves deeper, longer than ex­pected

Kathimerini English - - Business & Finance -

The Euro­pean Union, Euro­pean Cen­tral Bank and In­ter­na­tional Mon­e­tary Fund mis­sion to Greece said in a re­port yes­ter­day that the next dis­burse­ment of Greek aid could not take place un­til it cor­rected the un­der­fi­nanc­ing in its ad­just­ment pro­gram.

The long-awaited re­port by the so-called “troika” said Greece risked miss­ing its deficit tar­gets with­out fur­ther con­sol­i­da­tion mea­sures and that its re­ces­sion ap­peared to be longer and deeper than ini­tially ex­pected.

“The fi­nanc­ing strat­egy needs to be re­vised. Given the re­mote­ness of Greece re­turn­ing to fund­ing mar­kets in 2012, the ad­just­ment pro­gram is now un­der­fi­nanced,” it said. “The next dis­burse­ment can­not take place be­fore this un­der­fi­nanc­ing is re­solved.”

The fifth bailout pay­ment was due to be made in June.

The re­port said that the Greek econ­omy will con­tract 3.8 per­cent this year and ex­pand 0.6 per­cent next year, ac­cord­ing to the re­port e-mailed to jour­nal­ists by Ger­man of­fi­cials. The pre­vi­ous fore­cast for 2012 was for an ex­pan­sion of 1.1 per­cent.

The troika said a pri­va­ti­za­tion agency with an in­de­pen­dent board, to which the Euro­pean Com­mis­sion and eu­ro­zone mem­ber coun­tries could nom­i­nate mem­bers, would be set up shortly.

On the pri­va­ti­za­tion front, Greece’s gov­ern­ment may sell a 34 per­cent stake in gam­ing com­pany OPAP this year, in­stead of 2012 as orig­i­nally planned, it added. Also on a pro­vi­sional list for dis­posal this year are the state’s 1.2 per­cent stake in Na­tional Bank and a 0.6 per­cent hold­ing in Al­pha Bank. News of a pos­si­ble hitch in the next dis­burse­ment of aid to Greece came as Ger­many’s fi­nance min­is­ter said pri­vate cred­i­tors must share the bur­den of more fi­nan­cial help for Athens in any deal to pre­vent the coun­try from de­fault­ing on its debts.

In a letter sent to Jean-Claude Trichet, pres­i­dent of the ECB, the IMF’s acting man­ag­ing di­rec­tor John Lip­sky and other top fi­nance of­fi­cials, Wolf­gang Schaeu­ble pro­posed a bond swap that would ex­tend debt re­pay­ments by seven years, giv­ing Athens more time to re­form its econ­omy and over­come the debt cri­sis.

Such a move has pre­vi­ously been strongly op­posed by the ECB on the grounds it could spread tur­moil through the con­ti­nent’s fi­nan­cial sys­tem, while rat­ing agen­cies have warned it could be con­sid­ered a de­fault.

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