Tuesday, June 20, 2017

EU Says Greece Needs More Debt Relief Despite Buffer

by Marcus Bensasson, Sotiris Nikas & Birgit Jennen


June 20, 2017

Greece will need additional debt relief to regain the trust of investors, even though it’s likely to exit its bailout with a 9 billion euros ($10 billion) cash buffer, the European Commission said in a draft report obtained by Bloomberg.

The country’s 86 billion-euro third bailout program from the European Stability Mechanism, agreed by Prime Minister Alexis Tsipras and European creditors in 2015, will expire in August 2018 with 27.4 billion euros left unused, the commission estimates in the so-called “compliance report” dated June 16. Disbursements up to then should also “cater for the build-up of seizable cash buffer” of around 9 billion euros, according to the document.

The report contains an analysis of the country’s public debt that points to potential wrangling with the International Monetary Fund following an agreement last week to disburse bailout funds, in which the Washington-based fund only agreed to a new program “in principle.” Even as the commission’s analysis points “to serious concerns regarding the sustainability of Greek public debt,” its assumptions about the country’s future growth prospects are still more optimistic than those of the IMF.


Friday, June 16, 2017

Greece Gets a Break in Its Seven-Year Drama

by Viktoria Dendrinou, Nikos Chrysoloras & Sotiris Nikas


June 16, 2017

As last-minute Greek bailout deals go, this one wasn’t the worst.

The euro region’s finance ministers approved 8.5 billion euros ($9.5 billion) of aid on Thursday, and its most indebted state got a commitment that creditors will make sure it’s able to service future debt. If necessary, repayments can now be extended on emergency loans by up to 15 years.

While not perfect for anyone, it was a product of compromise. Germany agreed to come up with some figures on possible debt relief and to less ambitious budget targets. The International Monetary Fund then lent its credibility to the Greek bailout, if not its money. Greece got some cash and clarity.

Typically for these trade-offs, painful decisions were postponed and everyone will have to sit down again in a few months. But it feels like a question was answered, one that’s lingered since Prime Minister Alexis Tsipras clashed with Brussels over Greece’s crippling austerity two years ago: whether the country is a sustainable member of Europe’s single currency.


In the Pantheon of Greek Deals, Is This One Big?: QuickTake Q&A

by Eleni Chrepa


June 16, 2017

After months of wrangling, Greece’s creditors granted the struggling nation an 8.5 billion euro ($9.5 billion) aid payment and committed to debt relief if needed, putting an end to the latest round of political bickering. They also bound at least two more generations of Greeks to stringent austerity measures required to meet a new series of economic targets. Investors applauded the move as they digested what the latest deal means for stability in Athens.

1. What’s different this time?

The accord, reached by euro-area finance ministers in Luxembourg on Thursday, will cap Greece’s gross financing needs at 15 percent of gross domestic product for the medium term and at 20 percent thereafter, while extending maturities and deferring the interest payments on some bailout loans by as much as 15 years. Greece agreed to additional austerity measures -- equal to about 2 percent of GDP -- that go beyond the end of its latest bailout in 2018, including a lower threshold for tax-free income and a further cut in pensions. The steps will be offset by other measures if the country beats its ambitious budget targets.

2. What does this mean for Greek politics?

The decision will give Greek Prime Minister Alexis Tsipras some time to breathe “at least for the next six months, ’’ according to Nikos Marantzidis, a professor of political science at the University of Macedonia in Thessaloniki. Greece’s prolonged financial drama has made its citizens less sensitive to such decisions and a significant shift in opinion polls isn’t expected immediately. The payout will calm Greece’s financial markets, and the fact that it was larger than expected could mean fresh money can be directed to the economy starting in September, Marantzidis said.


Greece Wins 8.5 Billion Euro Payout as Debt Clarity Deferred

by Viktoria Dendrinou, Nikos Chrysoloras & Alexander Weber


June 15, 2017

Greece’s creditors agreed to release 8.5 billion euros ($9.5 billion) in new loans for Athens, capping a key chapter of the country’s bailout and ending months of uncertainty over whether it could meet large bond payments due in July.

The decision came after euro-area finance ministers sought to offer more clarity on Greece’s future debt path and outline possible measures they could take to ease its burden in the future. Meeting in Luxembourg on Thursday, they reinforced their commitment to extend Greece relief if needed and offered more specifics on what this could entail. But they stopped short of providing definitive steps, which they said would only come at the end of the bailout in mid-2018. The news sent the Athens Stock Exchange to a two-year high Friday.

“It’s a very constructive decision that will help Greece, also on the international market, to gradually get more credibility,” Luxembourg Finance Minister Pierre Gramegna said after the meeting. “The goal is for Greece to go back to the markets in the coming months or year.”

The compromise, nonetheless, leaves Greece with less than what it had sought, as it wasn’t enough to get the International Monetary Fund to acknowledge the country’s debt is sustainable. The Washington-based fund will consider signing off on a 14-month credit line for Greece, but only dole out fresh loans once it receives further assurances on debt relief measures. IMF Managing Director Christine Lagarde said she will propose the “approval in principle” of a new precautionary stand-by arrangement “probably in the range of $2 billion” that would depend on debt-relief measures materializing.


Greece and creditors reach deal on next part of bailout

by Jim Brunsden

Financial Times

June 16, 2017

Greece and its international creditors have reached a deal on the next stages of Athens’ €86bn bailout, removing the risk that it could default on more than €7bn in debt repayments that fall due next month.

The deal ends months of uncertainty that have weighed on Greece’s recovery and spooked investors, allowing the country to secure money it badly needs while putting off difficult discussions on debt relief.

Jeroen Dijsselbloem, the Dutch finance minister who chaired the meeting, said the outcome was “a major step forward” that would help put Greece’s economy on a sounder footing.

Thursday’s deal resolves a stand-off between the Washington-based IMF and the EU over the conditions for the fund to take part in Greece’s bailout — a step Berlin says is essential if Greece is to receive any more aid.


Thursday, June 15, 2017

Greece and Creditors Reach Deal

by Nektaria Stamouli

Wall Street Journal

June 15, 2017

Greece’s creditors agreed on Thursday to release the next tranche of its €86-billion ($96.5-billion) bailout but put off a final decision on relieving the country’s crushing debt burden until August of next year.

The agreement, reached in Luxembourg among the finance ministers of the eurozone, unlocks €8.5 billion of the bailout fund. While that brings Greece a small step closer to the end of an eight-year ordeal, the creditors’ refusal to address debt relief leaves the depleted country with bleak prospects for the future and at risk of needing yet another bailout down the road.

Greece’s travails remain a black mark in a eurozone that has otherwise found fresh confidence this spring, underscoring the bloc’s failure to root out the problems that threatened the single currency’s integrity five years ago.

The government of Prime Minister Alexis Tsipras enacted unpopular austerity measures whose effects extend well beyond next year’s end of the current bailout program with the aim of convincing creditors to go beyond releasing the next payment and restructure Greece’s debt.


Greece Set for Case `Full of Money,' No Detailed Debt Relief

by Viktoria Dendrinou, Radoslav Tomek & Rainer Buergin


June 15, 2017

Euro-area finance ministers meeting in Luxembourg will seek to close a key chapter in Greece’s bailout drama on Thursday, unlocking aid needed to end months of uncertainty while stopping short of a definitive deal to ease the country’s debt load.

A resolution at the so-called Eurogroup meeting would free up an expected 8.5 billion euros ($9.5 billion) in cash the Aegean state needs to repay bonds maturing next month. However, the euro-area finance chiefs, including Greece’s Euclid Tsakalotos, likely won’t finalize details on how to give Greece breathing room on the future of its debt obligations, a situation the International Monetary Fund has called unmanageable in the long term.

“The time is right to conclude the second review and give a green light for the disbursement aimed to cover Greece’s summer liquidity needs,” Slovak Finance Minister Peter Kazimir said in an interview in Bratislava before the meeting. “I expect Euclid will leave Luxembourg with a briefcase full of money.”

The IMF, which is mulling participation in the rescue program, has demanded more clarity on future relief measures to make the nation’s 315 billion euros of obligations sustainable. While all the creditors say Greece has completed the necessary economic reforms to receive the next slice of aid, euro-area nations are reluctant to further ease repayment terms on bailout loans.


Only debt relief will end the Greek crisis

by Yiannis Mouzakis & Nick Malkoutzis


June 15, 2017

As Greece heads into another meeting of eurozone finance ministers, it finds itself in a painfully familiar position: in desperate need of more bailout funding and a dose of clarity about its future.

But the country isn’t doomed to be the eurozone’s wounded animal forever. If the bloc can agree to give its weakest member a chance of turning itself around, Athens has the means to lift itself — and the rest of the Continent — out of an excruciating cycle.

Eurozone finance ministers are likely to agree that Greece should receive more than €7 billion in fresh loans, but domestic political concerns and all-around fatigue mean Thursday’s Eurogroup meeting is unlikely to be a watershed moment.

Luckily, there is one thing on which everyone can agree. Greece will only shed its pariah status — and free its lenders to end their laborious monitoring of its economy — if it can successfully conclude its third bailout program next summer.


Greece: A Case Study in Capital Controls

by Nektaria Stamouli

Wall Street Journal

June 15, 2017

When Greece imposed capital controls in the summer of 2015, the measures were a critical bulwark for banks left teetering after fears of a Greek exit from the European Union caused citizens to pull billions of euros in deposits.

Two years later, the country is a case study in capital controls. The measures prevented a collapse in the banking system, and predictions they would throw grit into the wheels of the economy haven’t materialized. Instead, controls have produced some surprising results, including helping Greece combat tax evasion, a perennial scourge.

As Greece’s creditors prepared to approve Thursday the final payment in the country’s up-to-€86 billion ($96.5 billion) bailout, there was no talk of lifting the measures—a reflection of the continued fragility of its battered economy.

“If we put aside the chaos created in the first couple of months, the mechanism currently in place is running smoothly,” says Nikos Manesiotis, who runs a food-import company and has had to navigate the measures to pay foreign suppliers. “But Greece remains the black sheep of Europe.”


Wednesday, June 14, 2017

Why Greece is Germany’s ‘de facto colony’

by Matthew Karnitschnig


June 14, 2017

Poor Alexis Tsipras.

For days, the Greek leader has been working the phones, trying to secure the best possible terms for his country as it enters the last mile of its seemingly endless cycle of bailouts. So far, his efforts have won him more mockery than respect — especially in Germany.

“He keeps calling the whole time, and the chancellor says again and again, ‘Alexis, this issue is for the finance ministers,’” German Finance Minister Wolfgang Schäuble told an audience here on Tuesday, referring to the Greek prime minister’s attempts to win over Angela Merkel to his cause.

Eurozone finance ministers are set to decide at a meeting in Luxembourg on Thursday whether to release a more than €7 billion tranche of aid to Greece. No one doubts Athens will get the money. Schäuble all but committed to it on Tuesday. But Tsipras wants something even more precious: debt relief.


Papademos bomb blast raises ‘revenge attacks’ concern

by Kerin Hope

Financial Times

June 14, 2017

From his hospital bed, with the unruffled calm of the central banker he once was, Lucas Papademos describes the moment that a booby-trapped package exploded in his lap.

“It resembled a box containing some CDs tightly wrapped in plastic as if by a machine,” recalls the former Greek prime minister, who opened the package while being driven home from his office in central Athens. “I tried to tear the plastic — then the box exploded.”

The attack on May 25 shocked Greece’s political and business elite.

Mr Papademos, a former European Central Bank vice-president, led a national unity government in Greece that in 2012 carried out the largest sovereign debt restructuring in history. It was the first time that a Greek official involved with handling the country’s seven-year economic crisis had been targeted, raising worries about a possible campaign of “revenge” attacks by radical anarchists linked to anti-austerity protests.


Tuesday, June 13, 2017

ECB Said to Be Unlikely to Include Greece in QE in Coming Months

by Alessandro Speciale


June 13, 2017

The European Central Bank is unlikely to include Greek bonds in its asset-purchase program for the foreseeable future, a person familiar with the matter said, as European creditors aren’t prepared to offer substantially easier repayment terms on bailout loans to improve the nation’s debt outlook.

Euro-area finance ministers will meet in Luxembourg on June 15 to discuss debt-relief measures that the ECB has said are needed before it will consider purchasing Greek bonds. The so-called Eurogroup is expected to complete a review of Athens’s rescue program that would allow for the disbursement of at least 7.4 billion euros ($8.3 billion) in aid needed for a similar amount of bond repayments in July.

An agreement among the ministers will likely allow the International Monetary Fund -- whose participation in the rescue program is a requirement for many nations -- to commit in principle to a conditional loan, said the person, who asked not to be named because the discussions are private. But the extent and wording of debt-relief commitments probably won’t convince the Governing Council of the ECB to buy Greek bonds.


Monday, June 12, 2017

In Greece, Allegations of Government Kidnapping and Forced Deportation

by Morgan Baskin

Pacific Standard

June 13, 2017

In the early hours of May 24th, a Turkish journalist seeking political asylum fled his home country. He managed to cross the Evros, a river that slices through the border of Greece and Turkey.

The journalist, Murat Çapan, was in exile, attempting to escape a nearly 23-year prison sentence on charges of terrorism that stemmed from his work as an investigative reporter and editor at the now-defunct news magazine Nokta.

But his freedom was short-lived. According to an account of his story made public by the Hellenic League for Human Rights, Çapan and two friends were apprehended by police in the Greek border town Didymoteicho; there, they were reportedly denied the ability to apply for asylum and put in an unmarked white van, which they were told would take them to the United Nations High Commissioner for Refugees.

It didn't. Instead, the van reportedly dropped the group off in a deserted field adjacent to a river, where five gunmen bound their hands and placed them in an inflatable boat. Two of the men then reportedly guided the group across the river to the Turkish border, near a military outpost, and abandoned them. According to the report, a group of Turkish police officers quickly discovered them and apprehended Çapan. He's currently in prison.


Macedonia considers using provisional name to join Nato

by Andrew Byrne & Kerin Hope

Financial Times

June 12, 2017

Macedonia will consider fresh proposals on its provisional name in an effort to unlock Greek opposition to its Nato membership, the country’s foreign minister has said.

Membership of the alliance would help calm the wider Balkan region after months of political tension that occasionally spilled into bloodshed, Nikola Dimitrov will tell senior Nato officials in Brussels on Monday.

Mr Dimitrov said it was too soon to discuss any specific name proposals but he would meet Greek ministers on Wednesday to restore trust between the two neighbours after Athens vetoed the Balkan republic’s Nato application in 2008.

“I will ask Greece to reconsider what kind of neighbour they want — do they want a stable, friendly country that offers hope for democracy and justice?” he said in an interview. “If we are a good neighbour, then hopefully political forces in Greece will realise this is a historic opportunity.”


Friday, June 9, 2017

Greek parliament approves more reforms, paves way to unlock €7bn of aid

by Kerin Hope

Financial Times

June 9, 2017

Greece’s parliament has approved a handful of extra reforms demanded by creditors in order to unlock more than €7bn of aid and complete a much delayed second review of the country’s €86bn current bailout programme.
While the leftwing Syriza government pushed a package of 120 fiscal and structural reforms through parliament last month, another 20 measures still had to be implemented either through legislation or administrative decrees.

The five amendments voted on Friday included several measures delayed because of opposition from Syriza politicians.

Greece hopes to receive approval for the aid payment at a meeting of eurozone finance ministers on June 15. The review was due to be completed last November but dragged on amid disagreements over pension and tax reforms.


Greek Government Accused of Deporting Turkish Asylum Seekers

by Patrick Kingsley

New York Times

June 8, 2017

In the early morning of May 24, a Turkish journalist fleeing a long prison sentence at home crossed the river dividing Greece and Turkey and claimed asylum in a police station on the other side.

A few hours later, according to two human rights organizations, the journalist, Murat Capan, was still in police custody — but back in Turkey, having been forced to return at gunpoint.

The Greek government denies that account, by the Hellenic League for Human Rights and the International Federation for Human Rights, which say that twice in the last few weeks, on May 24 and June 2, Turks fleeing persecution have been shipped back to their country.

The Hellenic League documented a total of 17 forcible deportations, or pushbacks, including those of seven children.


Wednesday, June 7, 2017

Greece calls on Europe to offer growth incentives, help break debt impasse

June 7, 2017

Greece urged its European lenders on Wednesday to offer incentives that will boost growth and help break an impasse between the euro zone and the International Monetary Fund on the size of relief the country needs to make its debt sustainable.

During a meeting of euro zone finance ministers last month, Greece, its euro zone lenders and the IMF failed to agree on the debt relief measures to be implemented after its current bailout expires in 2018, mainly because of different growth assumptions. They are now aiming for a deal at a June 15 Eurogroup meeting.

Government spokesman Dimitris Tzanakopoulos said growth incentives in the coming years, such as investment packages, could help bridge the differences and help "find the common ground needed for a comprehensive solution sought by all sides".

"This is an issue which has engaged the current discussions and it may be the key to reach a deal, in other words to find the common ground among all sides on growth projections," Tzanakopoulos said during a press briefing.


Friday, June 2, 2017

Greek debt relief could mean creditors waiting for up to 123 billion euros

June 2, 2017

A Greek debt relief scenario that put back interest payments until 2048 would mean the nation's euro zone creditors deferring receipt of up to 123 billion euros ($138.7 billion), according to a forecast by Germany's Finance Ministry.

The ministry's calculations, which were contained in a letter to a member of parliament seen by Reuters on Friday, contemplated the various restructuring scenarios laid out by the euro zone bailout fund, the European Stability Mechanism (ESM).

"With such an interest deferral, it would de facto be a new loan with a volume that depends on the development of interest rates," the document said. "The estimated volume of the deferred interest up until 2048 would be around 118-123 billion euros."

The Finance Ministry declined to comment specifically on the paper.


Wednesday, May 31, 2017

Constantine Mitsotakis, former prime minister of Greece, dies aged 98

by Kerin Hope

Financial Times

May 31, 2017

Constantine Mitsotakis, who has died aged 98, served briefly as prime minister of Greece between 1990 and 1993. But he wielded influence over its volatile politics for more than four decades as the head of a powerful political dynasty from the island of Crete.

Mitsotakis, a pro-western centrist, made the launch of unpopular market reforms his overriding priority as premier, following a decade of socialist rule. His New Democracy government carried out sweeping price liberalisations, overhauled the state pension system and set up the country’s first privatisation programme.

Back in opposition in 1994, he presciently warned the socialist government of Andreas Papandreou, the prime minister, that Greece would eventually have to seek help from the International Monetary Fund if further fiscal and structural reforms continued to be postponed.


Greek privitisation agency accepts €1.5bn bid to extend Athens airport contract

by Kerin Hope

Financial Times

May 31, 2017

Greece’s privatisation agency TAIPED has accepted an improved bid worth €1.5bn from the state-controlled Athens International Airport company for a 20-year extension of its current operating concession.

The agreement opens the way for TAIPED (The Hellenic Republic Asset Development Fund) to sell its 30 per cent stake in the airport operator later this year.

The Syriza government is committed to privatising the airport, Greece’s largest, under the terms of the country’s €86bn third international bailout.

TAIPED said the airport company bid €600m to retain the operating concession until 2046, while the Greek state would receive an additional €890m in revenues over the 20-year period.


Monday, May 29, 2017

Constantine Mitsotakis, Who Forged Greek-EU Ties, Dies at 98

by Eleni Chrepa


May 29, 2017

Constantine Mitsotakis, the Greek prime minister who strengthened ties with the European Union and attempted unpopular cuts to state spending in the 1990s, has died. He was 98.

He died in the early hours of Monday morning, according to a statement from his family.

Mitsotakis became prime minister in April 1990 when his New Democracy party won the right to govern on its own after nine years in opposition or as a coalition partner. During his three-year tenure, he consolidated Greece’s membership in the EU, known as the European Communities at that time, by securing his country’s accession to the union during the Maastricht Summit in December 1991. As foreign minister, he oversaw Greece’s entry into the EU a decade earlier.

As the Cold War was coming to an end, the pro-American Greek leader improved relations with the U.S. in 1990 by becoming his country’s first prime minister in 27 years to visit the White House, during George H.W. Bush’s administration.


Sunday, May 28, 2017

Greece offers opportunities for investors willing to take risks

by Kerin Hope

Financial Times

May 28, 2017

An open-air cinema with a natural backdrop of twinkling city lights and the inky Aegean Sea is the latest attraction for shoppers at One Salonica, a mall in the Greek port of Thessaloniki.

The new screen is the eighth that Cineplexx, an Austrian investor, has opened at the mall in a low-income neighbourhood since the company came to Greece two years ago. Christof Papousek, chief financial officer and a partner in Cineplexx, says the investment has worked out well.

“We’re profitable there, we feel in a very comfortable position and we’re ready to expand in the Greek market,” he says.

Such confidence might seem barely conceivable. Greece has been gripped by economic crisis for years: indeed Cineplexx arrived in mid-2015 just as the country was falling off Europe’s investment map. Capital controls had been imposed, the leftwing Syriza government was locked in a dispute with international creditors and Greeks were bracing for an involuntary exit from the euro.


Tuesday, May 23, 2017

Debt forgiveness is not the solution for Greece

by Daniel Gros

Centre for European Policy Studies

May 23, 2017

A superficially plausible narrative to the continuing problems besetting Greece is that it cannot recover because of a crushing debt burden. However, this narrative overlooks some basic facts and cannot explain why all the other peripheral countries that needed official support (Portugal, Ireland, Spain and Cyprus) are recovering.

The key to understanding Greece’s debt situation is that most of it is owed to the European institutions, which have already extended the maturity to over 30 years and are charging very low interest rates. Expenditure on interest now amounts to 3.2% of GDP, which is much less than what the Greek government had to spend on interest before the crisis and before the Troika! Interest expenditure is also lower for Greece than for Italy (3.9% of GDP) and much less than for Portugal (4.2% of GDP). Even the US government has to spend more on interest (3.8% of GDP) than the Greek government. But nobody argues that these countries need debt forgiveness to be able to grow.

An implicit conclusion from the fact that interest is not an important cost item despite high debt is that debt forgiveness makes little difference at low interest rates. Let us assume that the official European lenders were to forgive Greece €100 billion, undeniably a huge sum. What would this change? This huge concession would save the Greek government a little over €1 billion in interest payments each year, which represents less than 1% of the country’s GDP. Savings of this order of magnitude are unlikely to make much of a difference.


Greece and the Troika – Lessons from international best practice cases of successful price (and wage) adjustment

by Ansgar Belke & Daniel Gros

Centre for European Policy Studies

May 23, 2017

This paper reviews cases of successful price and wage adjustment, which are often regarded as constituting best practice, in Australia, Latvia and the German new states and contrasts them with the Greek experience under the Troika programmes. Latvia stands out as having had the quickest adjustment in wages. By contrast, before the crisis, Greek wages appeared to have been largely insensitive to labour market conditions but this changed with the programme. We find that the reaction of wages to unemployment in Greece under the programme was similar to that observed in Germany and Portugal (a case that has attracted less attention). A priori, it is likely that the change in wage behaviour in Greece was due to the labour market reforms imposed under the programme. But this cannot be proven beyond doubt.


Greece Has the Resources to Heal Itself

by Leonid Bershidsky


May 23, 2017

The euro area's finance ministers again failed to come to an agreement on debt relief for Greece. No surprise there. Hammering out the details would force them to accept an uncomfortable reality: Greece won't be ready to tap private debt markets for years to come. In the meantime, if it wants to get off life support, it will have to find a way to cut tax evasion.

The unpopular Greek government of Alexis Tsipras keeps trying for a debt-relief deal. All its many concessions, which have made Greeks and everyone else forget this was once a rebellious, far-left cabinet, are geared toward that goal, and so is the mammoth, 245-page austerity bill passed last week. There are more pension cuts and more tax increases, all in the name of showing shareholders that Greece is willing to be frugal and so should be allowed to tap markets again. Starved of investment, the country is in recession again, the only euro-area member to report negative growth (minus 0.5 percent year-on-year) in the first quarter of 2017. Greece almost certainly won't meet the growth target set by the European creditors -- 3 percent in 2018; the Bloomberg consensus forecast for that year is just 1.9 percent.

A nominal haircut for official investors is, however, a red line Germany and other northern European countries won't cross, as the Eurogroup reiterated in its statement on Monday. Instead, the statement repeats the insistence that Greece maintain a primary budget surplus of 3.5 percent of gross domestic product for the medium term. The International Monetary Fund wants more specifics from Greece's creditors on how maturities and interest rates on the debt will change if it is to keep taking part in the Greek program. The Greek government wants a deal so it can explain to voters why they're expected to put up with continued austerity. The required specifics, however, can only emerge before the September election in Germany -- say, at the next Eurogroup meeting in June -- if the creditors incur no additional costs. Otherwise, Chancellor Angela Merkel's government will have to answer to conservative voters for her inability to stop paying Greece.


Monday, May 22, 2017

Greek Creditors, IMF Seek to Bridge Differences Over Debt Relief

by Viktoria Dendrinou & Rainer Buergin


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.


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.


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.


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.”


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.


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.


Friday, May 12, 2017

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

by Silvia Aloisi & David Lawder


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."


Thursday, May 11, 2017

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

by Yalman Onaran & and Vernon Silver


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.


Tuesday, May 9, 2017

Number of Chinese Tourists Visiting Greece to Rise 10-Fold

by Eleni Chrepa & Sotiris Nikas


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.


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.


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.


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.


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.


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

by Eleni Chrepa & Sotiris Nikas


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.


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.


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.


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.


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.


Thursday, April 20, 2017

Greece Hits a Bailout Target. The IMF Is Not Convinced

by Sotiris Nikas


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.


Wednesday, April 19, 2017

Why the troika and Syriza must remove Greece’s debt roadblocks together

by Miranda Xafa

World Economic Forum

April 19, 2017

On 7 April in Malta, euro-area finance ministers agreed on the key elements of a deal that would unlock further financial assistance to Greece under the current (third) €86 billion bailout. The “in principle” agreement came as a huge relief, as Greece will be unable to meet the €7.4 billion in debt payments due in July without external financing.

But the economic drama continues. Several more steps need to be taken for Greece to avert default.

First, the troika of creditors must return to Athens to finalize the review and present it to Eurogroup ministers by June at the latest. Once it has agreed terms, Greece needs to legislate the agreed measures to ensure that, ignoring outstanding debt, tax income exceeds spending by 3.5% of GDP annually (what is known as a primary surplus) at least until 2020. Prime Minister Alexis Tsipras, leader of the ruling radical left Syriza party, has said he would not submit the measures to a vote in parliament without agreement on debt relief. Creditors, on the other hand, say that debt relief will not be discussed before the measures are voted, and the review is completed.

Once staff-level agreement is reached, the IMF needs to decide whether it will participate in the Greek program with financing. Some euro-area creditors – notably Germany and the Netherlands – have made it clear they will not approve further assistance to Greece without IMF participation. The roadblock? The IMF believes the Greek debt is “highly unsustainable” at 180% of GDP, and has said it would only present a program to its executive board if it receives “satisfactory assurances on a credible strategy to restore debt sustainability”.


Monday, April 17, 2017

After Economic Crisis, Low Birthrates Challenge Southern Europe

by Liz Alderman

New York Times

April 16, 2017

As a longtime fertility doctor, Minas Mastrominas has helped couples in Greece give birth to thousands of bouncing babies. But recently, disturbing trends have escalated at his clinic.

Couples insisting on only one child. Women tearfully renouncing plans to conceive. And a surge in single-child parents asking him to destroy all of their remaining embryos.

“People are saying they can’t afford more than one child, or any at all,” Dr. Mastrominas, a director at Embryogenesis, a large in vitro fertilization center, said as videos of gurgling toddlers played in the waiting room. “After eight years of economic stagnation, they’re giving up on their dreams.”

Like women in the United States and other mature economies, women across Europe have been having fewer children for decades. But demographers are warning of a new hot spot for childlessness on the Mediterranean rim, where Europe’s economic crisis hit hardest.

As couples grapple with a longer-than-expected stretch of low growth, high unemployment, precarious jobs and financial strain, they are increasingly deciding to have just one child — or none.


Tuesday, April 11, 2017

Surprise! Pro-Washington Declarations in Athens

by Nikos Kostandaras

New York Times

April 11, 2017

Before Donald Trump’s election turned much geopolitical conventional wisdom on its head, if you were in the Greek government, you’d have to be a fool to proclaim, “Only America can help us.”

But someone has, and the fact that it was a member of a coalition led by a radical left-wing party, Syriza — whose members have traditionally opposed United States policy — underlines the contradictions of a government comprising members of the extreme left and extreme right. It shows also how the past seven years of austerity and reforms have reshaped politics and attitudes. And it suggests that anti-Americanism in Greece has faded over the past few years, as the Obama administration supported Athens’s efforts to remain in the common European currency and preached against creditors’ harsh treatment.

Above all, it suggests that in difficult times, old alliances become more precious.

Suspicion and sometimes vilification of the United States by the left has been a standard feature of Greek politics since 1947, when the Truman Doctrine and later the Marshall Plan helped stave off a Communist victory in the civil war that followed World War II and the German occupation. Then, a right-wing military dictatorship from 1967 to 1974 had at least tacit support from Washington. Each year, a march commemorating the student revolt that triggered the end of the junta culminates at the United States Embassy, a constant reminder of a complicated past.


Θόδωρος Πελαγίδης: Μέση Γη: Η Επιστροφή του Πολιτικού Κέντρου

Monday, April 10, 2017

Greece’s creditors must act to end the gridlock

Financial Times
April 9, 2017

As an economic recovery gathers strength in even the more troubled parts of the eurozone’s periphery, the desperate situation in which Greece remains mired becomes ever more apparent. Almost a quarter of the workforce is unemployed. Growth stalled at the end of last year and business owners have been withdrawing their money from banks. The recent deterioration in confidence is in large part due to the pervasive uncertainty over the next stages of the country’s €86bn bailout programme.

The deal reached last week with monitors of the aid programme therefore comes as a huge relief. The agreement centres on income tax and pension reforms that Athens must enact now, in order to unlock further aid. It should pave the way for Greece to receive further financial assistance before July, when debt repayments of more than €6bn are due — a sum that would otherwise cripple the economy.

The measures, which will broaden the tax base and make the cost of pensions more sustainable, are worthwhile in and of themselves in the medium term. If they end the gridlock, the boost to confidence could also more than offset the immediate hit to incomes.

However, if the outlines of an agreement between creditors and debtor are now clear, there remain huge divisions to be bridged between the creditors.


Friday, April 7, 2017

Greece Rescue Payout Moves Closer With Deal to Quicken Talks

by Viktoria Dendrinou, Nikos Chrysoloras & Ian Wishart


April 7, 2017

Greece and its international creditors struck an agreement at a meeting of euro-area finance ministers in Malta on Friday, breaking the latest deadlock over the country’s rescue and paving the way for about 7 billion euros ($7.5 billion) in aid for Athens.

The two sides, which have been wrangling over key economic overhauls for months, reached a tentative agreement which allows bailout auditors to return to Athens to finish negotiations on the measures that Greece needs to implement to qualify for the next tranche of emergency loans. Although Friday’s decision represents progress, the euro area won’t unlock the payout until their audit is concluded.

“The big blocks have now been sorted out and that should allow us to speed up and go for the final stretch,” Dutch Finance Minister Jeroen Dijsselbloem, who leads the euro-area meetings, told reporters at the conclusion of the talks. “Further work will continue in the coming days with a view of the mission returning as soon as possible to Athens to complete the work.”

Talks between the government of Prime Minister Alexis Tsipras, euro-area creditors and the International Monetary Fund have been stalled for months as the parties haven’t been able to agree on how to amend Greece’s pensions, labor market and tax system. Greece finally accepted a proposal which was presented earlier this week.


Thursday, April 6, 2017

The scale of Greece’s economic problems

by Kerin Hope

Financial Times

April 6, 2017

As Greece continues talks with creditors over the next stages of its international bailout programme, Donald Tusk, president of the European Council, has warned that it is “no success story” yet. Further discussions will take place at the meeting of EU finance ministers in Malta on Friday. Greek prime minister Alexis Tsipras has called for an emergency summit of EU leaders if a deal is not struck by the end of the week.

But while Greece tussles over the reforms required to unlock the next tranche of bailout aid, its economy is sliding back towards recession, making the need for funding all the more urgent. The charts below give a measure of Greece’s economic health to date.

Forecasts revised down

In December, Greece looked set for a strong recovery, with the country’s central bank and the International Monetary Fund both forecasting the economy would grow by at least 2.5 per cent in 2017. Their projections were markedly more optimistic than those of a consensus of leading international economists.

But a return to contraction in the fourth quarter of last year along with Athens’ failure to complete the latest bailout process within 2016, as Mr Tsipras had promised, brought a downward revision. The central bank last month cut its growth projection for 2017 to 1.5 per cent.


Wednesday, April 5, 2017

Greece Said to Near Bailout Compromise on Pensions, Taxes

by Viktoria Dendrinou


April 5, 2017

Greece and its creditors are closing in on a deal over the reforms needed to unlock fresh loans for the country, even as Prime Minister Alexis Tsipras warned that a summit of euro-area leaders may be required if an agreement isn’t reached by Friday.

In a proposed compromise discussed on Tuesday, Greece would reduce its pension outlays by 1 percent of gross domestic product in 2019 and lower its tax-free threshold in 2020 by a similar amount, according to three officials with knowledge of the talks. The tax measures would be accelerated by a year if Greece is set to miss its primary surplus target, which excludes interest payments, in 2018, said the officials, who asked not to be identified since discussions are ongoing.

Finance Minister Euclid Tsakalotos led a Greek delegation to Brussels on Tuesday to try to overcome differences with the nation’s creditors over pension and labor market overhauls. Agreement on the plan, which still needs the approval of the International Monetary Fund and the government in Athens, would clear the way for auditors to return to Greece to conclude negotiations and allow for an aid disbursement before the country has to make more than 7 billion euros ($7.5 billion) in bond payments in July.

One of the officials said the exact breakdown of additional savings envisaged in the proposed compromise was still not fully agreed. Technical issues, including reforms to the energy sector, will also need to be resolved before the review can be completed.

“Had talks and contacts on Greece during the day. Work continues,” Jeroen Dijsselbloem, the Dutch finance minister who presides over meetings with his euro-area counterparts, said in twitter post. A planned conference call between the two sides on Wednesday evening was canceled, one of the officials said.


Tuesday, April 4, 2017

Greece pursues pension and labour reform deal to unlock more aid

by Jim Brunsden, Kerin Hope & Mehreen Khan

Financial Times

April 4, 2017

Greek ministers and the country’s bailout monitors were on Tuesday trying to strike a deal on the pension and labour market reforms needed to unlock further financial aid.

With the clock ticking down to more than €6bn in debt repayments that Athens must make in July, negotiators say an accord on the main elements of the policy package must be reached soon to stave off the risk of a crisis this summer.

Reaching the deadline without a further tranche of bailout loans would leave Greece’s economy “in such a state that all parameters of decision-making would have to be revisited”, one EU official said. It “would be extremely detrimental”.

A deal on the reform package is one of several requirements for the International Monetary Fund to join the €86bn bailout as a financial partner — a step that Germany says is pivotal if further tranches of aid are to be provided to Greece.


Does Greece Need More Official Debt Relief? If So, How Much?

by Jeromin Zettelmeyer, Eike Kreplin & Ugo Panizza

Peterson Institute for International Economics

Working Paper 17-6
April 2017

Creditor countries and international organizations continue to disagree whether Greece should receive additional official debt relief, and if so how much. This paper first shows that these disagreements can be attributed to competing assumptions about Greece’s future capacity to repay, particularly about economic growth and the fiscal primary balance. It next evaluates the plausibility of alternative primary balance assumptions using international evidence about fiscal adjustment experiences. It concludes that primary balance paths required to make Greece’s debt sustainable are not plausible and that Greece will therefore require additional debt relief. Finally, the paper shows that the debt relief measures suggested by the Eurogroup in May 2016 (albeit with significant caveats on whether they will in fact be granted or not) could be sufficient to address Greece’s sustainability problem, provided the Eurogroup is prepared to accept both very long maturity extensions on European Financial Stability Facility (EFSF) debt (to 2080 and beyond) and interest deferrals that could lead to a large rise in EFSF exposure to Greece before it begins to decline. If the Eurogroup wishes to avoid the latter, it will become necessary to either (1) extend the scope of the debt restructuring, (2) lower the interest rates charged by the EFSF significantly below current predictions, or (3) extend European Stability Mechanism (ESM) financing beyond 2018 and delay Greece’s return to capital markets for a protracted period.

Working Paper (PDF)

Greek Pensions Hot Potato Puts Tsipras in Bailout Tight Spot

by Sotiris Nikas & Antonis Galanopoulos


April 4, 2017

Athens resident Spiros is among the reasons Greece is having a hard time reaching a bailout accord with creditors.

The 82-year-old is one of about 2.7 million pensioners likely to face a cut in monthly payments for the 12th time since the debt crisis in 2010, as part of the measures required for the disbursement of the next tranche of emergency loans. The government of Alexis Tsipras wants any new cuts in pensions to be phased in gradually and not be put in place from 2019 -- an election year -- as creditors demand. It says it wants to protect pensioners like Spiros, who account for more than a quarter of the country’s 10 million population and are already bracing for higher health insurance costs and a lower income-tax-free threshold.

The government says a brutal cut will further erode the purchasing power of pensioners and worsen an economy that has shrunk by a quarter in the past seven years and left more than 23 percent of the work-age population without jobs. Spiros, who takes home a pension of 1,200 euros ($1,281) a month, is supporting not just himself and his wife, but two adult children, their spouses and a grandchild.

“I am struggling to meet my obligations,” he said, declining to provide his last name because he fears he’ll embarrass his family. “So far I’ve been able to pay all my taxes and bills, but I don’t know if I can keep doing it.”