Monday, May 22, 2017

Greek Creditors, IMF Seek to Bridge Differences Over Debt Relief

by Viktoria Dendrinou & Rainer Buergin

Bloomberg

May 22, 2017

Euro-area finance ministers gathered in Brussels on Monday, seeking a compromise with the International Monetary Fund on debt relief for Greece that could signal the final act in the seven-year-old drama for the continent’s most indebted state.

The IMF is reluctant to participate in a bailout unless the euro area ensures the country’s 315 billion-euro ($355 billion) debt load is sustainable. Some nations like Germany, which resists altering Greece’s debt profile, won’t release any new funds until the Washington-based fund joins the program. Athens needs the new aid installment before it has to repay about 7 billion euros to lenders in July.

“The starting positions are all rather wide apart,” French Finance Minister Bruno Le Maire told reporters before the gathering. “There’s a lot of work that needs to be done to bring the positions closer.”

The so-called Eurogroup meeting began after finance ministry deputies earlier in the day failed to resolve the outstanding issues, as disagreements between the IMF and Germany over Greece’s economic outlook and required debt relief persisted, according to two European Union officials with knowledge of the talks, who asked not to be identified because the discussion was private.

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Anarchists Fill Services Void Left by Faltering Greek Governance

by Niki Kitsantonis

New York Times

May 22, 2017

It may seem paradoxical, but Greece’s anarchists are organizing like never before.

Seven years of austerity policies and a more recent refugee crisis have left the government with fewer and fewer resources, offering citizens less and less. Many have lost faith. Some who never had faith in the first place are taking matters into their own hands, to the chagrin of the authorities.

Tasos Sagris, a 45-year-old member of the Greek anarchist group Void Network and of the “self-organized” Embros theater group, has been at the forefront of a resurgence of social activism that is effectively filling a void in governance.

“People trust us because we don’t use the people as customers or voters,” Mr. Sagris said. “Every failure of the system proves the idea of the anarchists to be true.”

These days that idea is not only about chaos and tearing down the institutions of the state and society — the country’s long, grinding economic crisis has taken care of much of that — but also about unfiltered self-help and citizen action.

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Sunday, May 21, 2017

Athens calls on creditors to strike a deal

by Jim Brunsden

Financial Times

May 21, 2017

Greece is calling on its creditors to strike a deal that would allow it to honour billions of euros in debt repayments, arguing that it has upheld its side of the bargain by pushing through painful tax and pension reforms.

IMF officials and eurozone finance ministers will hold talks on Monday intended to pave the way for Athens’ next tranche of bailout aid so that it can make more than €7bn of debt repayments in July.

“Greece has done its bit, most would say more than its bit,” Euclid Tsakalotos, Greece’s finance minister, told the Financial Times.

He added that a deal would open the door to the country’s participation in the European Central Bank’s economic stimulus programme and provide “the signal to the markets that so many investors have been waiting for”.

The aid is dependent on bringing the IMF into the bailout programme as a financial partner.

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Friday, May 19, 2017

Greek parliament backs reform package

by Kerin Hope

Financial Times

May 19, 2017

Greece’s parliament has narrowly approved an omnibus reform package needed to unlock more than €6bn of bailout aid and open the way for the country’s international creditors to reach a deal on debt relief.

Lawmakers from the governing left-wing Syriza party and its coalition partner, the right-wing Independent Greeks, backed the bill in a late-night vote on Thursday.

The centre-right opposition New Democracy party, which holds a strong lead in opinion polls, voted against the package, even though it is committed to implementing reforms if it wins the next election.

Alexis Tsipras, prime minister, told parliament: ”Undoubtedly there are some difficulties [with the package] but we’ve got to the top of the ladder, and I’m confident we’re entering a period of stability and strong recovery.”

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Wednesday, May 17, 2017

Greeks walk out in national strike over austerity

by Kerin Hope

Financial Times

May 17, 2017

Greek unions staged a nationwide strike on Wednesday to protest against fresh austerity measures that parliament is being asked to approve as part of the country’s €86bn international bailout.

Civil servants and staff at state hospitals and public utilities took part in the 24-hour walkout, which disrupted international flights and other transport across the country.

The leftwing Syriza-led government of Alexis Tsipras, prime minister, signed up this month to a new €4.5bn package of medium-term fiscal and structural reforms in order to unlock bailout aid. Greece needs the aid to repay debt that matures in July.

Union leaders billed the strike as “a last chance” to influence the government ahead of Thursday’s vote on the measures, which are being debated as part of an omnibus reform bill under fast-track procedures in parliament.

Thousands of protesters holding banners and leftwing party flags gathered outside the parliament building, but the mood appeared subdued compared with angry anti-bailout demonstrations under previous governments.

“We’re betrayed by our own people. It’s the poor that are going to suffer this time more than any other group,” said Nassos Vardas, a retired construction worker and former official with the communist trade union PAME.

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Sunday, May 14, 2017

Greece downgrades 2017 growth forecasts

by Kerin Hope & Claire Jones

Financial Times

May 14, 2017

Greece has unveiled a four-year budget proposal that assumes sharply lower growth rates after months of wrangling with international creditors over reforms needed to unlock further bailout aid and open the way for medium-term debt relief.

The Greek economy is projected to grow 1.8 per cent this year, against an earlier forecast of 2.7 per cent according to the proposal, which was presented to parliament late on Saturday alongside an omnibus bill containing scores of structural reforms.

Lawmakers are set to approve both bills by May 18, ahead of a meeting of the euro area finance ministers on May 22 where the issue of debt relief for Greece is due to be discussed.

The Syriza government’s revised growth projection for 2017 is more pessimistic than the European Commission’s forecast of 2.1 per cent, down from 2.7 per cent at the start of this year.

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Friday, May 12, 2017

IMF, euro zone say need more time to reach Greek debt relief deal

by Silvia Aloisi & David Lawder

Reuters

May 12, 2017

The International Monetary Fund and euro zone government lenders need more time to reach an agreement on debt relief for Greece because the euro zone is still not sufficiently clear in its intentions, IMF chief Christine Lagarde said on Friday.

Top euro zone officials and Lagarde met on Friday on the sidelines of a G7 finance ministers meeting in the Italian port city of Bari to discuss debt relief which the Eurogroup of euro zone finance ministers promised in May 2016, under strict conditions.

"We will carry on working on this debt relief package. There is not enough clarity yet. Our European partners need to be more specific in terms of debt relief which is an imperative," Lagarde told reporters on entering the G7 talks.

The Fund has made debt relief for Greece a condition for its participation in the latest bailout for Athens, the third one since 2010. Several euro zone governments, led by Berlin, want the IMF to participate for credibility reasons even though they disagree with the need for debt relief.

German Finance Ministers Wolfgang Schaeuble, also at the meeting in Bari, asked if he would be prepared to ease the conditions for debt relief, said:

"We are prepared to stick to what we have agreed in May 2016. That is the basis on which we are working ... I am still in favour of getting a solution, at least a political solution, in the Eurogroup on the 22nd of May."

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Thursday, May 11, 2017

EU Passports for Sale in Sunny Cyprus Lure Rich Russians' Cash

by Yalman Onaran & and Vernon Silver

Bloomberg

May 11, 2017

In Limassol, on the southern coast of Cyprus, shop signs in Cyrillic outnumber those in Greek, the local language. Yachts emblazoned with Russian monikers fill berths in a newly built marina. And just past the office of radio station Russkaya Volna, restaurants lining the boardwalk serve pelmeni with, of course, vodka.

This Moscow-on-the-Mediterranean has blossomed as Russians and their money flock to the tiny European Union outpost to become, in a sense, not Russian. Long known as a hub for offshore Russian finance -- and more recently as a focus of investigations into Russian links to President Donald Trump’s entourage -- Cyprus has enabled a more sophisticated way to camouflage those funds: If you can’t launder a Russian’s cash, the scheme goes, launder the Russian himself.

The wave began after the government streamlined its money-for-passports program to help Cyprus recover from the 2013 collapse of its banking system and an ensuing recession. Now foreigners can become citizens in less than six months in exchange for investing at least 2 million euros ($2.2 million) in Cyprus property or 2.5 million euros in government bonds or companies.

Since then, the nation has issued about 2,000 passports, Finance Minister Harris Georgiades said in an interview in Nicosia last month. About half have gone to Russians, according to PricewaterhouseCoopers and other consultants who guide clients through the process. The impact has been profound, sparking about 4 billion euros of foreign investment last year -- equivalent to almost a quarter of the island’s annual economic output.

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Tuesday, May 9, 2017

Number of Chinese Tourists Visiting Greece to Rise 10-Fold

by Eleni Chrepa & Sotiris Nikas

Bloomberg

May 9, 2017

Fosun International Ltd., the Chinese conglomerate that’s part of a venture to transform the former Athens airport site into one of the biggest real-estate projects in Europe, is now turning its attention to Greek tourism.

Fosun wants to use its stake in tour operator Thomas Cook Group Plc to start building vacation packages specifically for the vast Chinese market, Senior Vice President Jim Jiannong Qian said in a May 4 interview in Athens. The Chinese government predicts 1.5 million of its citizens will start vacationing in Greece in the medium term.

Tourism accounted for over one-quarter of Greece’s gross domestic product in 2016, according to the Greek Tourism Confederation. Visitor numbers in 2016 reached 28.1 million, up 7.6 percent from 2015. Tourists generated 13.2 billion euros ($14.5 billion) in travel receipts, according to the Bank of Greece. Of these travelers, 150,000 came from China, Beijing says.

“Greece is a very safe place for visitors,” said Qian who is also president of Fosun’s Tourism and Commercial Group. There are also good opportunities for tourism investments in Greece, he said.

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Thursday, May 4, 2017

What Democracies Can Learn From Greece's Failed Populist Experiment

by Stathis Kalyvas

The Atlantic

May 4, 2017

While the crisis in Greece no longer captures international headlines as it once did, the country’s troubles never went away. Greece remains the only Eurozone country still subject to a joint Eurozone-International Monetary Fund fiscal adjustment and structural reform program. In the long-running saga’s latest episode, the recent completion of a crucial compliance review paves the way for the release of $7.6 billion in bailout funds to Greece from its creditors in exchange for further budget cuts and tax increases.

Greece’s troubles date back to the implosion of its economy in 2010. Faced with a massive budget shortfall caused by a combination of overspending and undertaxing at a time of swelling global financial risk, Greece found itself unable to refinance its huge debt. As a member of the Eurozone and a debtor to several major European banks, it was able to elude outright default, securing a bailout from its European partners who, with the assistance of the IMF, demanded an onerous fiscal adjustment. With or without a bailout, an adjustment of such magnitude was both necessary and painful. But the hastily designed, poorly implemented program exacerbated Greece’s considerable economic distortions—a large and inefficient public sector and an uncompetitive private one—triggering a brutal economic depression accompanied by massive unemployment. Combined with the inevitable political turmoil that ensued, this crisis sparked a global scare about Greece’s imminent exit from the Eurozone, which carried dire implications for the survival of the common European currency.

All this made Greece fertile terrain for populism, long before Trump crashed onto the scene and a referendum brought us to the brink of Britain’s exit from the European Union. In fact, Greece’s experiment in populism—broadly pointing to political movements that emerge from the margins to challenge mainstream politicians in the name of the people, while preaching a gospel of sweeping change and scolding the “elites” as failed, corrupt, and responsible for most social ills—has a great deal in common with those in America and Britain.

By upending conventional political practice and highlighting their status as political outsiders, populists secure a political advantage in a time of crisis, change, and uncertainty. Yet, as Greece’s experiment showed, such disruption is very costly. Embracing their outsider status might deliver victory to populists, but does little to help them navigate a complex reality that requires serious, long-term planning, and compromise. If anything, reality sets populists up for costly failure.

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Greece’s Creditors Propose Debt Swap

by Jan Hildebrand & Martin Greive

Handelsblatt Global

May 4, 2017

Greece’s international creditors – the European Commission, the European Stability Mechanism, the European Central Bank and the International Monetary Fund – are preparing a debt-relief package for the country, Handelsblatt has learned from sources who have seen the proposal.

A central element of the proposal is a debt swap in which the European Stability Mechanism, or ESM, would purchase €13 billion of Greece’s IMF loans outstanding in 2019 and beyond, using funds likely to be untapped in Greece’s bailout program to make the purchase. The ESM would offer lower interest rates and a longer maturity, providing Athens with significant relief.

The German government is not opposed to the idea in principle, according to information obtained by Handelsblatt. Berlin views the proposal as one option among many, but a decision will not be made until after the current bailout program expires in the middle of the coming year.

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Wednesday, May 3, 2017

Greek Marathon Isn’t Over Yet

by Simon Nixon

Wall Street Journal

May 3, 3017

The eurozone is one big step closer to resolving its longest-running and most damaging crisis. But before anyone gets too excited, there is still a long way to go.

Greece this week finally agreed with its creditors on a package of reforms needed to unlock its next installment of bailout cash. With the economy stalling and major bond redemptions falling due in July, Athens badly needs the money.

But as things stand, it won’t receive a cent until the International Monetary Fund is satisfied that there is a credible plan in place to put Greece’s debt on a sustainable footing. Without this, the IMF won’t lend anything to Greece—and without the IMF on board, the German government has said it won’t give Greece any more money either.

The stage is therefore set for another difficult negotiation, this time pitting the IMF against Greece’s eurozone creditors led by Berlin. It could be a bruising fight.

The first argument will be over how much debt relief Greece is likely to need. That will hinge in part on what budget surpluses Greece’s creditors expect it to achieve in the medium term. The bailout program currently envisages Athens delivering a primary surplus in 2018 of 3.5%, before interest costs, and maintaining this for 10 years. But no one thinks this is realistic.

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Tuesday, May 2, 2017

Greece agrees deal with creditors on bailout reforms

by Kerin Hope

Financial Times

May 2, 2017

Greece has wrapped up a deal with creditors on details of reforms that must be enacted before the country can receive the next disbursement from its €86bn bailout programme.
The deal, which covers a wide range of fiscal and structural measures, from fresh cuts in pensions to liberalising Sunday trading, was completed during intensive talks over the past week after months of wrangling between Greek finance ministry officials and bailout monitors from the European Union and the International Monetary Fund.

Differences over the size of cuts to be applied in 2019 on pensions already reduced by over 40 per cent since 2011 held up an agreement, according to people involved in the negotiations.

“There is white smoke… the negotiation is finished with agreement on all the issues,” said Euclid Tsakalotos, the finance minister, after an all-night session of talks.

The further pension reduction was agreed at 18 per cent.

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Greece's Deal With Creditors Paves Way for Debt Relief Talks

by Eleni Chrepa & Sotiris Nikas

Bloomberg

May 2, 2017

Greece and its creditors from the euro area and the International Monetary Fund concluded months of negotiations regarding the second review of the country’s current bailout program after hours of final discussions that lasted until early Tuesday in Athens, unlocking discussions for the country’s debt relief.

Greece yielded to a number of demands set by its creditors, including pension cuts and a lower tax-free threshold of around 5,700 ($6,221) to 6,000 euros from 8,636 euros now. The agreement will also allow more shops to be able to work on Sundays in various areas throughout the country. “The discussion for an agreement that secures Greek debt’s sustainability now begins,” Greek Finance Minister Euclid Tsakalotos told reporters in Athens after the meeting.

If Greece beats its targets, the government will be able to implement a number of offsetting measures to ease the austerity burden, including subsidies for rent of as much as 1,000 euros per year, as much as 250 million euros in child support and lower contributions to medication for those of lower income, a Greek government official, who spoke on condition of anonymity said. Collective bargaining for Greek employees will be reinstated starting September 2018, the official said.

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Monday, April 24, 2017

Greece to sell stake in Thessaloniki port operator to German-led consortium

by Kerin Hope

Financial Times

April 25, 2017

A German-led consortium is the highest bidder for a two-thirds stake in OLTH, operator of the northern Greek port of Thessaloniki, in a deal valued at €1.1bn, Greece’s privatisation agency HRADF said.

The disposal of Greece’s second-largest port, which is strategically located to serve the Balkan countries and the Black Sea region, was agreed under terms of the country’s current bailout by the European Union and the International Monetary Fund.

Infrastructure sales are a key part of an ambitious privatisation programme but have been delayed by opposition from hard-line members of the left-wing Syriza-led government.

Private-equity firm Deutsche Invest Equity Partners, France’s Terminal Link and Greece’s Belterra Investments, controlled by Russian-Greek businessman Ivan Savvides, offered €231.9m for 67 per cent of OLTH shares. The price represents a 70 per cent premium over the shares’ market value.

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Sunday, April 23, 2017

IMF Warns Greece That Additional Economic Overhauls Are Needed

by Ian Talley

Wall Street Journal

April 23, 2017

The International Monetary Fund had a sobering message for Greece this weekend: Even if the country secures debt relief from its European creditors—a question that is by no means assured with bailout talks still deadlocked—the nation still needs even more painful economic overhauls than currently planned.

Seven years into an economic crisis and another near-term financial emergency looming, that is a message no Greek wants to hear and a key reason why the IMF is also urging Germany and Athens’ other European creditors to give the country hope in the form of real debt relief.

The country’s “fiscal and structural reforms...pension reforms, tax reforms, are only a down payment,” said Poul Thomsen, IMF’s European department chief and Greece’s original bailout architect, on the sidelines of the fund’s semiannual meeting of finance ministers and central bankers.

To bring the country’s unemployment and income levels back to precrisis rates will take “deep structural reforms, many of which are not yet on the books,” he said. The jobless rate is currently at 22% and half of all the youth labor force are without work.

“This is a long-term project,” he said.

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Greek bankers during financial crisis face bond swaps charges

by Kerin Hope

Financial Times

April 23, 2017

The former governor of Greece’s central bank and the ex-chairman of Piraeus Bank are facing criminal charges over bond swaps worth hundreds of millions of euros in the run-up to the country’s economic crisis.

The case has come to light as the leftwing Syriza-led government intensifies its crackdown on high-level corruption. Many observers view the campaign as an attempt by the ruling party to divert attention from a new round of tax increases and pension cuts agreed with bailout creditors.

A former defence minister already faces a parliamentary investigation over alleged bribe-taking, while procedures are underway to restart a long-delayed court case involving backhanders allegedly paid by Siemens of Germany to Greek suppliers.

The two bankers, George Provopoulos, the central bank chief between 2002 and 2014, and Michalis Sallas, who ran Piraeus for 25 years, face charges of breach of trust. Both men deny any wrongdoing.

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Saturday, April 22, 2017

I.M.F. Torn Over Whether to Bail Out Greece Once Again

by Landon Thomas Jr.

New York Times

April 21, 2017

As the International Monetary Fund approaches the seventh anniversary of the contentious Greek bailout, it is torn over whether to commit new loans to a nearly bankrupt Greece.

For more than a year, I.M.F. officials have been saying — loudly — that they cannot participate in a new rescue package for Greece unless Europe agrees to ease Greece’s onerous debt burden.

The fund’s reluctance to commit additional money to Greece also highlights a widely held view among I.M.F. officials — and in the Trump administration — that the fund overextended itself in Greece. They also see the responsibility for restoring the country’s economic health as resting primarily with Europe, which currently holds 80 percent of Greek debt.

At the same time, Greece, which has acceded to demands from the fund to cut spending and bring in more revenue, faces a 7 billion euro debt repayment in July, which it may not be able to meet if the I.M.F. and Europe cannot reach a new bailout agreement.

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Thursday, April 20, 2017

Greece Hits a Bailout Target. The IMF Is Not Convinced

by Sotiris Nikas

Bloomberg

April 20, 2017

Greece achieved a 2016 primary surplus almost seven times higher than its bailout target, but the International Monetary Fund is skeptical the country can sustain that performance.

The Hellenic Statistical Authority is set on Friday to unveil data on last year’s primary surplus, which Eurostat is expected to validate on Monday. The surplus will be close to 4 percent of gross domestic product, according to a finance ministry official who asked not to be identified in line with policy. The bailout target was for a primary surplus of 0.5 percent of GDP.

In spite of its better-than-expected primary surplus last year, the IMF is not convinced Greece will be able to maintain that level of performance for 2018 and beyond. The fund estimates that at least half of the primarily surplus for 2016 came from one-off measures rather than structural changes that will continue delivering results in the years to come, according to a person familiar with its analysis. That has prompted the fund to demand more austerity measures.

Greece’s level of primary surplus is key in determining the kind of debt relief it will need. The more such surplus it has, the less debt relief will be needed. Whether or not Greece should get such relief is a source of contention between the country’s euro-area creditors and the IMF.

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