Greece’s hopes of getting a deal sealed with envoys of international lenders over how to close a looming budget gap and speed the pace of delayed reforms has apparently hit a road block with reports the two sides are “miles apart, billions apart,” on what to do.
Greece insists the hole in the 2014 budget is 500 million euros while the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) says it’s as big as 2.9 billion euros, which could require more of the austerity measures that Prime Minister Antonis Samaras said he would never again impose.
That was the assessment from an EU official in Brussels who briefed journalists on Nov. 12 even as the negotiations in Athens were going on between Finance Minister Yannis Stournaras and Troika officials.
The same official said it was out of the question that Eurozone finance ministers would take a decision on the disbursement of Greece’s next loan tranche at the upcoming Eurogroup on Nov. 14-15. He added that it was unlikely that the latest review of Greece’s adjustment program would be completed by the time of the December Eurogroup.
The EU official suggested that the current slow progress in talks between the two sides meant that decisions regarding Greece would probably be taken after the “skiing holidays,” which are usually taken in February, which could pose a problem for the government which desperately needs more money and wants to avoid more social unrest.
There is a lot of frustration among the lenders that Greece keeps dragging its feet on reforms, such as privatization and going after tax cheats among many so-called “prior actions” that must be done before more money is released.
There is also reportedly concern in Brussels that the delay in completing the review is further starving the Greek economy of liquidity as the state is not paying off its arrears, including tax refunds and creditors, damaging chances of growth because businesses don’t want to take a chance on not being paid if they invest in the country.
The EU official said that the discussion regarding further debt relief for Greece would begin in June, when lenders will now exactly how big the 2013 primary surplus was. Greece wants to stiff the Troika with big losses the same way a previous government did in 2011 when it hit private investors, including Diaspora bondholders, with 74 percent losses.
That ruined the Cypriot banking system and forced the government there to seek a 10 billion euro ($13.7 billion) bailout from the Troika which demanded the seizure of nearly half the money in bank accounts over 100,000 euros ($137,000) and more austerity.