Greece set to receive sixth €8 billion installment - The Best from Greece
Posted on: 11/Oct/2011
The European Commission, the European Central Bank (ECB), and the International Monetary Fund (IMF) teams have concluded their fifth review mission to Greece regarding recent economic developments.
The mission has reached a staff-level agreement with the Greek authorities on the necessary economic and financial policies which would bring the economic programme back on track.
The mission also acknowledged that the recession will be deeper than previously anticipated and that recovery could only be expected from 2013 onwards.
They have concluded that there is no improvement in markets' confidence partly because reforms did not reach the needed momentum. Nevertheless, exports showed some increases and the inflation has come down over the last year and is expected to remain below the Eurozone's average in the forthcoming period.
Despite the deep recession, the mission found out that the government had achieved a major deficit reduction. However, the fiscal target for 2011 is beyond the reach, due to a further drop in GDP, as well as some shortcomings in the implementation of some of the agreed measures.
Regarding the next year, the mission expressed its belief that the additional measures announced by the government and implementation of the adjusted Medium-Term Fiscal Strategy could ensure that the deficit target of €14.9 billion will be met.
Looking beyond that, the mission concluded that additional growth-friendly measures are likely to be needed to meet program targets.
In the area of privatisation, the mission expressed concerns over delays in the preparation of the assets for privatisation. However, they acknowledged the government's commitment to the revenue target of €35 billion by the end of 2014. in the banking sector, the new amendment of the banking law ensured the stability of the financial system.
The mission recognised the progress in implementation of the structural reforms in the transport sector, licensing procedures, and regulated professions, but warned that an uneven progress calls for a reinvigoration of reforms.
Overall, the combined EC-ECB-IMF mission acknowledged the progress the Greek authorities continue to make regarding the fiscal consolidation. They urged the government to put more emphasis on structural reforms, especially in the public sector.
The mission underlined that the success of the programme would depend on adequate financing from private sector involvement and the official sector. Following the approval of the review by the Eurogroup and the IMF’s Executive Board, the next credit tranche of €8 billion will become available.
The Greek Finance Minister Evangelos Venizelos welcomed the findings, saying it was a balanced one, reflecting the factual state of the country.
As things stand, Greece is due to receive the sixth instalment of €8 billion as a part of the 2010 loan agreement of €110 billion, and this should occur some time during the next two weeks.
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