Officials speed up negotiations in bid to clinch deal
Banks, privatizations on agenda today
Finance Minister Euclid Tsakalotos and Economy Minister Giorgos Stathakis are to meet representatives of the country’s international creditors today for talks on bank recapitalization and privatization, with another meeting already scheduled for tomorrow as the two sides intensify efforts to secure a deal.
The priority today is to determine the course of action for Greece’s cashstrapped banks, which suffered a battering when the Athens Stock Exchange reopened yesterday after a five-week shutdown, and to agree the broad strokes of a bold program of sell-offs. The aim of tomorrow’s meeting is to conclude the “first phase” of negotiations and quickly move forward in a bid to clinch a deal before August 20, when Greece must meet a 3.2-billion-euro payment to the European Central Bank or face default again.
Government officials have indicated that they want to have a deal finalized and voted through Parliament by August 18 to allow adequate time for loans to be disbursed.
But in comments to Skai TV yesterday, Alternate Finance Minister Dimitris Mardas did not rule out the possibility of talks running over that deadline, which however remains the government’s “goal.” In that case, Athens would need to seek another bridge loan to cover its debt to the ECB.
For a deal to be reached, Greece must meet a series of creditor demands. As regards privatization, lenders want Greece to commit to completing all pending privatizations, including ports, airports and the site of the old airport at Elliniko as well as proceeding with new sell-offs.
As for Greek banks, talks today are expected to focus on how to tackle nonperforming loans and on the process for further recapitalization. The lenders’ needs will be assessed on the basis of stress test results, which are expected by September 4. It is thought the four systemic banks will require at least 10 billion euros.
Another thorny issue that was discussed yesterday during a meeting between Labor Minister Giorgos Katrougalos and creditor envoys was pension reform. According to sources, creditors want the phasing out of early retirements, to which Greece has committed, to begin retroactively from July 1 as opposed to January 1, 2016. According to sources, the envoys are particularly determined to stop the retirement of those aged between 50 and 55, and want the practice abolished by 2018. Leaving talks with the envoys yesterday, Katrougalos said that labor market reform will focus on European best practices and International Labor Organization standards.
Separately yesterday, the Finance Ministry declared that a legislative decree issued at the end of last week which allows the short-term recruitment of advisers was not drafted with the aim of hiring of foreign experts to help compile Greece’s next memorandum. The government is obliged to cooperate with “distinguished experts” on technical matters relating to bank recapitalization and the creation of a privatization fund, the ministry said.
Declan Costello (right), the European Commission’s representative, arrives at the Labor Ministry in Athens yesterday. Representatives of Greece’s creditors met with Labor Minister Giorgos Katrougalos.