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Troika Sees Small Progress, Big Gaps

EU_TroikaGreece is making achingly slow progress with fiscal and structural reforms but woefully behind in other key areas and is facing a funding gap that needs to be filled somehow, according to the European Commission’s report on the third review of the country’s second bailout program.
“Important progress has been made on public finances and the recapitalization of the four core banks has been completed,” the Commission said, adding that, “The legal basis for the new semi-autonomous revenue administration has been created, but perseverance in implementing the ongoing reforms will be key to deliver concrete results in the fight against tax evasion.”
The words were close to the same the European Commission has been spouting for three years while international lenders have been delivering bailouts while demanding harsh austerity measures in return and lamenting how slow things move in Greece, particularly going after tax cheats and taking on the country’s rich elite and politically-powerful protected classes who have largely escaped sacrifice.
European Union officials said Greece needs to do better and try harder.  “Several important structural reforms have been implemented in the areas of healthcare, the opening of professions, and public financial management,” said the Commission’s report. “However, far-reaching reforms are still needed in many other areas, including public administration reform, improvements of the business environment, energy and justice.”
An earlier EU finding was that there could be  a funding gap of 3.8 billion euros ($5 billion) next year that will have to be filled with savings or spending cuts or more austerity measures, the same kind of pay cuts, tax hikes, and slashed pensions that Prime Minister Antonis Samaras said he was done with.
The EC outlined several areas that Greece must pay more attention to, including healthcare spending, tax administration, reducing state arrears and advancing its privatization program which is far off target and this year is hoped to bring in 1.6 billion euros, 1 billion less than expected after the failure to get a single bidder for the state gas company DEPA. Next year’s target has been increased from 1.9 billion to 3.5 billion euros but Greece has missed every previous goal set by the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB).
Brussels also said that it believes Greece is on course to see some growth next year after “a gradual bottoming out of the decline in economic activity” and “deceleration” in the contraction of employment this year. The Commission expects GDP to shrink by 4.2 percent this year and to rise by 0.6 percent in 2014. According to EU analysts, growth will reach 2.9 percent in 2015 and 3.7 percent in 2016 but previous projections have been proved wrong as well.
The report was published shortly after the German Parliament’s budget committee approved a release of new loans for Greece. Athens is to receive 2.5 billion euros in fresh financing from the Eurozone on July 29. The IMF approved a further $2.29 billion payment to Greece as the latest installment of a bailout program. The latest payout brings the IMF’s total disbursements in the Greek rescue program to $10.94 billion.
Greece is making overall, albeit slow, progress in its efforts to reform its ailing economy according to a report by the European Commission and the ECB which was published on July 29.

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