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Disbursement of Loan Tranche to Greece at Risk of Delay

euroworking-group (1)The next loan tranche to Greece is at risk of delay since there are issues pending regarding the completion of the first bailout program review.
Euro zone technocrats identified issues that have not been addressed yet by Athens after a three-hour teleconference with the Greek side.
On security funds, the Greek government has not resolved the issue of supplementary pension (EKAS) to about 100,000 pensioners who don’t fulfill the criteria to receive it. Lenders ask the supplementary pensions to be returned to the state retroactively.
Athens has not legislated on the issue yet and creditors expect it to be resolved as a condition for the tranche disbursement. Greece has proposed alternative measures to close the EKAS gap but they haven’t been specific yet.
Lenders also disagree on certain tax deductions for freelancers and security fund contributions to businesses operating in areas with less than 2,000 inhabitants.
The competent labor ministry insists that no changes will be made to those legislated and that ultimately the beneficiaries of EKAS.
The issue of non performing loans that are guaranteed by the State is another thorny issue that has the two sides crossing swords. Lenders insist that non performing mortgages of primary residences of 140,000 and up should be negotiated with distress funds without exceptions.
On privatizations, the deal for the sale of the former Athens airport land at Elliniko should be signed within the week and must be ratified in Greek Parliament by the end of June.
The Greek government hopes to close all remaining details for the evaluation at the latest by Wednesday, for two reasons.
The first is that on Thursday, June 3rd, the European Central Bank is scheduled to discuss whether Greek bonds can be accepted as collateral in order for Greek banks to get cheap loans. if Greece’s evaluation is not completed, the meeting might be postponed.
The second reason is that after the evaluation is completed, the procedure for the tranche to be disbursed takes 15 days at least. The more the tranche delays, the harder for the Greek government to repay loans and meet financial obligations. The funds earmarked for Greece amount to 7.5 billion euros, with about 5 billion due to various creditors by the end of July.

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