A teleconference held on Sunday evening between top Greek government officials and representatives of the country’s creditors reportedly failed to bridge differences on a handful of prior actions needed to free up the largest portion of a now delayed loan to the country.
The latest obstacles to releasing a total of 10.3 billion euros – 7.5 billion of which was scheduled for disbursement in early June – come after a Eurogroup approved the first review of the Greek program (third bailout) last week but with attached “conditions”. It is exactly those conditions, which have been codified into the current prior actions, that again separate Athens from its institutional lenders: Commission, ECB, ESM, IMF.
One of the obstacles is creditors’ demand that a bonus paid out to low-income social security beneficiaries be deducted, retroactively, from the start of the year, something the leftist Greek government is absolutely weary of implementing, given its repeated promises of avoiding such a development and after already passing a 5.4-billion-euro austerity package. The latter was coupled with a 3.6-billion-euro “contingency” package should fiscal targets through 2018 appear fleeting.
Another prior action demanded by creditors in the wake of the first review is an absolute liberalization of the framework for managing and reselling the Olympus-sized mountain of debt accumulated by non-performing loans in the country. The SYRIZA-led government had hoped to exclude "bad loans" with state guarantees attached, as well as loans allocated or guaranteed by the state-run Consignment Deposits and Loans Fund.
At present, the looming dates for a “post-conclusion” resolution of prior actions include June 2, when an ECB board of directors meeting will take place in Vienna.
In September, creditors will again assess whether all conditions have been met for the disbursement of the second tranche of the current loan, totaling 2.8 billion euros.
The following month, October, will witness the commencement of the process for the second evaluation of the Greek program, with five to 5.5 billion euros in loans at stake.
The end of the year, November to December, is the period when the IMF will decide whether to continue its participation in the Greek program, based on a debt sustainability study and the level of expected primary budget surpluses.
According reports, Greek FinMin Euclid Tsakalotos and chief negotiator Giorgos Houliarakis led talks with creditors on Sunday.
