CNBC: Greece eyes graduation from Troika’s tough lessons
The CNBC states characteristically that it’s back to school for the Greek government as it tries to show it’s leaving the chaos of its crippling debt and economic crisis behind and can now stand on its own feet.
Today the Greeks will meet “Troika” which manages Greece’s 240 billion euro ($325 billion) bailout program – the European Commission, European Central Bank, and the International Monetary Fund – Athens will argue that this year it wants to move away from austerity and towards more growth-orientated policies.
The ultimate target is to “graduate” successfully from the bailout program when it ends in 2016 without further assistance – just as Ireland and Portugal did this year.
Symbolic of this strategy is the location of the meeting, to kick off the country’s fifth review of the lending program: Paris instead of the traditional venue of Athens.
In return for the loan program, Greece has had to implement a series of stringent austerity measures – which have crippled the country’s economy and sent unemployment soaring.
No surprise then that Greek taxpayers are not happy to see the “men in the black suits” — as Troika officials are often dubbed — parade into their hometown.
Finance ministry sources told CNBC that the Athens government asked for the meeting to take place in Paris as part of its communication strategy but stressed that the shift does not mean the government will not fulfill its obligations to the Troika.
After this fifth review is successfully concluded, Greece will try to get some relief on its bailout loan repayments. The country achieved a primary budget surplus last year, which opened the door to debt reduction negotiations according to a November 2012 agreement with its euro zone counterparts. Any deal is expected to also involve the IMF via the so called Official Sector Involvement (OSI) and will probably come in the shape of repayments’ extension.
But Greece has to show that the program is still on track and the country has implemented much-needed economic and political reforms.
Greek public debt is expected to peak this year to 177 percent of GDP, the highest in the 18-country euro zone, and a 12.6 billion euro financing gap is looming for 2015, according to an IMF report.
Funding from the euro zone ends this year and the IMF will only keep contributing to the Greek bailout as long as the country sticks to strict conditions. If Greek banks do well at the upcoming ECB stress tests, the government could use the 11.5 billion euro it holds in the Hellenic Financial Stability Fund (HFSF) as a buffer for banks, to finance next year’s gap. It could also issue more debt after its successful return to the markets this year, when it managed to raise 4.5 billion euro in three and five year bonds.