BREAKING NEWS

BREAKING NEWS

Greece, lenders to start talks again, as countdown starts

Now Reading:

Greece, lenders to start talks again, as countdown starts

Text size Aa Aa

By Lefteris Papadimas and Renee Maltezou ATHENS (Reuters) – Greece’s creditors will return to Athens next week to assess its bailout compliance, in a review which should be concluded swiftly if the country is to meet its goal of emerging from lenders’ supervision next year. Athens hopes to wrap up the review by January to start discussions with its lenders right after on the terms of exiting its current, 86-billion euro (£76.8 billion) bailout in August 2018, and on further debt relief – a long-standing Greek demand. European Union and International Monetary Fund technical teams were expected in Athens on Wednesday to prepare the ground for the mission chiefs’ return next Monday, the first of at least two scheduled visits, officials close to the talks said. The talks will focus on Greece’s efforts to reduce banks’ bad loans, a thorny issue for the EU and the IMF, and its fiscal performance, the officials said. Reforming the public sector and opening up the energy market will also be high on the agenda. So far, Athens has completed about 15 of about 100 demands which include some labour, pension and tax reforms, opening up professions and some privatisations in a seemingly easy review. But risks remain as the clock is ticking, the officials warned. “There aren’t many difficult issues under this review as opposed to the previous ones,” an official close to the talks told Reuters. “But a delay (beyond January) entails the risk of igniting more demands from the IMF on banks and debt relief.” Greece is expected to outperform this year’s target for a primary surplus – which excludes debt servicing costs – of 1.75 percent of gross domestic product. It also expects economic growth of 1.8 percent this year.

POLITICAL CHALLENGE Reaching a deal with the lenders soon is a challenge for Prime Minister Alexis Tsipras who wants to convince angry voters that seven years of sacrifices have paid off and the crisis is nearly over, as he seeks to renew his term that ends in 2019. Differences between Athens, the EU and the IMF over reforms and debt relief have often delayed Greece’s progress assessments which are necessary for the release of vital loans. The previous bailout review dragged on for more than six months, and the delays hurt economic activity and unnerved markets. The management of non-performing loans is expected to dominate the upcoming talks. The Washington-based Fund backed away last month from a demand for an asset quality check on Greece’s banks after a proposal by the European Central Bank to bring forward planned stress tests next year. But a senior IMF official reiterated this month that the Fund wants to make sure that banks have adopted an effective strategy to reduce them. As part of plans to improve the management of bad loans, Greece has agreed to launch foreclosure e-auctions. They were initially expected to begin in September but one official said they were likely to be pushed back to December, despite a recent call from Tsipras to complete most agreed reforms by November. Separately, the IMF and Germany still disagree over Greece’s ability to achieve a 3.5 percent primary surplus in 2018. The IMF puts the figure at 2.2 percent. Athens has sought assurances from the Fund that it will not demand additional belt-tightening but will keep pushing for debt relief, an issue long contentious in Germany and that could become even more so with a new government in Berlin. Greece has received three bailouts – about 270 billion euros – since 2010. In July, it made its first market foray in three years, aiming to restore full market access by 2018. It also wants to build a buffer from unused loans and money raised from markets. “It’s common ground … that Greece needs to emerge from the bailouts,” one official close to the talks said. (Additional reporting by Jan Strupczewski in Brussels; Editing by Gareth Jones)
euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.