EU-IMF, Greece agree reforms for next loan tranche
October 12, 2011 00:00:00
ATHENS, Oct 11 (Economic Times): Greece's international creditors on Tuesday said they had reached an agreement with Athens on reforms to put its troubled economy back on track and unlock a loan tranche needed to avert default next month.
"The mission has reached staff-level agreement with the authorities on the economic and financial policies needed to bring the government's economic program back on track," said a joint statement from the European Commission, the European Central Bank and the International Monetary Fund.
It said that a loan tranche of 8.0 billion euros, part of a 110-billion-euro ($149-billion) bailout extended to Greece last year, will be available "most likely in early November" following approval by eurozone finance ministers and the IMF's executive board.
Greek reserves to pay wages and pensions run out in mid-November, raising the prospect it would have to declare a default.
The audit mission gave credit to Greece for achieving a major reduction in the public deficit since the start of the adjustment program, despite a deep recession.
But it noted that a further contraction in the Greek economy and slippage in the implementation of some agreed measures made the original 2011 deficit reduction target untenable.
The government earlier this month lowered its public deficit forecast to 8.5 per cent of Gross Domestic Product this year, above the 7.4 per cent agreed with the IMF and European Union in the bailout accord.
The deficit stood at 15.4 per cent in 2009.
The team of auditors from the three organisations, or 'troika', said additional measures announced by the government after a break in the talks in early September "should be sufficient" to maintain the 2012 deficit target of 14.9 billion euros.
But they noted that additional measures were likely to be needed to meet targets in 2013 and 2014, while warning the government to carry out fiscal consolidation "in a socially acceptable manner" after a major strike backlash against the latest austerity measures.
