Bailout aid could be held up for months if Greece reforms lag

DPA Brussels/Athens | Updated on March 12, 2018 Published on July 04, 2013

Greece is unlikely to receive any more bailout funds for several months unless the cash-strapped country strikes a deal on reforms with its international lenders by the end of this week, a European Union official warned on Wednesday.

“If we don’t conclude this review, I don’t see any disbursement for the next three months,” the official said in Brussels, speaking on condition of anonymity. “It is not a course I find advisable.” At the same time, he expressed confidence that such a development would not plunge the country into bankruptcy, pointing to its ability to obtain short-term financing on financial markets.

“I think the Greek authorities have handled challenges that were far greater,” the official noted. “Is it a disaster? No. Is it uncomfortable? Yes.” Experts from the European Commission, European Central Bank and International Monetary Fund have been negotiating with Greek authorities for several weeks on its reform progress. Their opinion helps decide whether Athens has met conditions to receive its next aid tranche.

Eurozone finance ministers must approve the disbursement. Their last meeting before the summer break is scheduled for Monday.

The review being carried out by the so-called troika of experts in Athens would have to be finalised by Friday for the ministers to be ready to take up the matter, the official said.

“We sincerely hope that it can be completed in time,” he noted.

During a visit to Athens, German Foreign Minister Guido Westerwelle said Greece had to implement a series of reforms it had agreed to under the bailout.

“Things are moving in Greece ... we hope Greece continues on this path so that the pace of reforms does not decelerate,” Weastewelle said during a press conference after holding talks with his Greek counterpart Evangelos Venizelos.

The main challenges include a fiscal gap that has formed due to cost overruns in the Greek health sector – not “huge sums, but it’s noticeable,” the official said – and the “not spectacular” progress made on decreasing staffing in the public sector.

“It has been clear for a very long time what needs to be done,” the official said on the staff cuts. “I wouldn’t understand any further procrastination or problems here.” Other changes include reforming the country’s bloated public sector. Athens has so far failed to implement plans to transfer civil servants between departments. The plan would include 15,000 involuntary staff transfers.

Creditors have long insisted that Greece needed to carry out the public servants transfers by the end of 2012. The staff transfers are part of a separate commitment to fire 4,000 civil servants by the end of the year, a promise which nearly led to the collapse of the conservative-led government of Antonis Samaras.

Last month, Samaras ordered the immediate shutdown of state broadcaster ERT, firing all 2,700 employees and shutting off the signal. The government has said that it will launch a smaller state TV and radio network by the end of August.

The development led to the decision of Samaras’ junior coalition partner, the Democractic Left, to leave the government in protest.

Samaras is now left with a slim majority in the 300-seat parliament.

Media reports have suggested that bailout loan payments worth 8.1 billion euros ($10.5 billion) could be carved into several smaller disbursements that would be conditional on further progress in order to keep up the pressure on Athens.

The Brussels official did not rule out such an approach, although he said no decision had yet been made.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on July 04, 2013
This article is closed for comments.
Please Email the Editor