Against a backdrop of strikes and street protests, senior officials from the EU and International Monetary Fund arrived at the finance ministry in Athens on Wednesday to spend a week going through the books, assessing whether the government is on target to meet the terms of the current bailout in order to get more money.
Without the next 12 billion euro tranche – which is the key to paying 13.7 billion euros of immediate funding needs – Greece would effectively default.
Economist Vagelis Agapitos said the government still has a lot to do: “The next couple of months are crucial and it needs to catch up and deliver tangible results that will demonstrate its commitment to meet the targets that it set out in the IMF and EU agreement.”
Greeks complain that the cuts made so far, in an effort to get the deficit down to 7.4 percent of GDP, have prolonged the recession with the economy forecast to shrink three percent this year after a 4.5 percent decline in 2010.
The unions say austerity is killing the economy. Unemployment is at a record high 15.1 percent and tax revenues have been hit, hampering efforts to tackle a debt of nearly 150 percent of GDP.
The Socialist government is lagging behind the bailout targets, triggering doubts that it will be able to find investors prepared to lend Athens money any time soon.
In their audit, the EU and IMF mission chiefs will focus on a 2011-2015 fiscal plan and on progress in raising 50 billion euros from privatisations by 2015.