Greece gets drip-feed of bailout cash

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Greece gets drip-feed of bailout cash

Greece gets drip-feed of bailout cash
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As the almost daily anti-austerity protests continued in Greece, Athens was told by the eurozone and the International Monetary Fund that it will get more bailout money – but only in instalments and only if the government keep its promises on cutting public sector jobs and selling state assets.

The tough approach underlines that the international lenders are running out of patience with Greece:

Jane Foley, a senior currency strategist with Rabobank said: “I think this is a compromise deal. They are going to be given the money but it is clearly going to be drip fed to them and clearly this will prevent, hopefully, any escalation of any crisis, but it does mean that they are still being pressured really quite hard to keep on going through with these reforms.”

However, keeping Athens in a hand-to-mouth existence could threaten its efforts to emerge from economic depression.

One way Greece wants to stimulate a heavily tourism-reliant economy, and take the pressure off some of its own people, is by cutting the Value Added Tax rate on restaurant, cafe and bar bills from the current 23 percent to 13 percent.

The eurozone finance ministers agreed they could do that from the first of August, but only if the government can make up the 100 million euro short fall from other tax sources.

Bleak Greek outlook

At the same time an Athens-based think tank warned the country’s economic outlook is bleaker than the lenders think.

The IOBE think tank said Greece’s economy could shrink by as much as five percent this year.

The austerity prescribed by the international lenders to stop Greece going bankrupt is expected to keep the economy in depression for a sixth consecutive year and push already soaring, record unemployment to yet new highs – 27.8 percent of the workforce this year.

“The projection on growth must be adjusted downwards – the recession this year will be around 5.0 percent,” IOBE said in its quarterly report. That is down from its previous forecast of a 4.6 percent slump.

The EU and IMF expect the economy to shrink by 4.2 percent in 2013; the Bank of Greece projects a contraction of 4.6 percent.

The economy shrank 6.4 percent last year.

Protests mount

Prime Minister Antonis Samaras’s coalition government is facing stiff resistance to the austerity reforms.

Protests against public sector layoffs have gathered steam in recent days.

On Tuesday, hundreds of municipal workers, including uniformed municipal police furious at EU/IMF-mandated layoffs in the public sector, took to the streets Athens for the second day in a row, sounding sirens and waving “Say no to layoffs!” banners.

Greece was granted a three-month extension by the troika – EU, IMF and European Central Bank – to put 12,500 public sector workers in a so-called mobility pool – meaning they have eight months to find work in a different department or end up fired. It had missed a June deadline to do that.

Some 4,200 public sector workers, among them teachers, school guards and employees at the administrative reform ministry, will be placed on the scheme by the end of July.