Greece: Troika Back For Debt Negotiations
European and IMF inspectors are expected to put pressure on the Athens government to impose further cuts during vital talks.
A closed-down shop in Athens is all too typical of the Greek economy
Greece is bracing itself
for the implementation of another round of savage cuts after "troika"
officials arrived in Athens for their latest inspections.
European and IMF inspectors returned to Greece bent on pressing the
ruling coalition to push ahead with privatisations and promises to start
shedding thousands of public sector jobs.Yet as a week of meetings kicked off, stocks suddenly plunged 5% and investor confidence looked shaky as a deadline to attract buyers for the country’s natural gas company passed without any bids.
The expected sale collapsed after Russia’s GAZPROM withdrew its interest, citing concerns over the financial outlook of DEPA, the Greek natural gas company, and fears that the European Union would subsequently impose stringent conditions.
"We haven’t received enough guarantees that DEPA's finance position would not get worse after the deal is completed," said Gazprom spokesman Sergei Kupriyanov.
"The company is already experiencing difficulties with users' unpaid bills."
The surprise Russian climb-down marks the most serious setback to Greece’s bid of raising 2.6bn euro in asset sales by the end of the year.
It also casts a shadow over upbeat data and claims by the conservative-led government that Greece was well on a path of recovery three years after falling off a fiscal cliff and needing a 240bn euro bailout.
Prime Minister Antonis Samaras instructed officials to "quickly pursue" other potential buyers and launch a fresh bid.
Failure to make up for the shortfall in the privatisation target would force the government to impose additional spending cuts or added tax hikes – moves that would crush Greeks already reeling from years of austerity.
Greece has also agreed to sack some 15,000 public sector employees as part of its multi-billion euro loan requirements.
But that could prove risky.
Just last week, the IMF admitted mistakes in its handling of the Greek crisis, by insisting on a policy of austerity that exacerbated the country's financial woes.
The fund forecast that the country’s annual output would drop by only 5.5% from its 2009 level but it slumped by three times that.
Unemployment in 2012 was anticipated to peak at 15% but it is now hovering at a haunting level of 26.8%.
Over the weekend, Finance Minister Yannis Stournaras suggested in an interview with the To Vima newspaper that the IMF's admission might afford Greece with some leverage in its new round of talks this week with creditors.
Opposition parliamentarians are even insisting the government revise its austerity pact altogether.
"We should opt for a moratorium on paybacks to creditors and pursue a new recovery plan for the economy," Dimitris Vitsas, a leading member of the Syriza opposition party said.
Despite widespread opposition, Greece's three-party coalition agreed to the job cuts plan two months ago, acceding to the tough terms of a new multi-billion euro bailout hammered out in December.
Failure to show progress in those privatizations and layoffs could pull the plug on a 3.3bn euro loan planned for this month.
Whether European and IMF inspectors are willing to cut Greece some slack remains unclear.
Ahead of his visit to Greece, Poul Thomsen, the IMF mission chief in Greece, seemed in an uncompromising mood.
"I regret nothing," he said. "Nothing."
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