A bevy of open issues remain unresolved in the wake of Tuesday’s approval by the Eurogroup of the first review for the Greek program, particularly in terms of a much more flexible management framework demanded by creditors for non-performing loans (NPLs) in Greece.
The NPLs issue must be resolved in order for a first installment of 7.5 billion euros to be disbursed to Athens in the first half of June by the ESM. The total amount signed-off by lenders is 10.3 billion euros by the end of the year.
Creditors want legal protection – through legislation -- for bank executives during the restructuring process as well as the resale, on the secondary market, of “bad loans” that carry state guarantees.
NPLs of all varieties in Greece have skyrocketed above the 100-billion-euro mark, a development that again threatens local lenders' operations.
Moreover, creditors are pushing for an acceleration of the process to finalize the real estate development of the Helleniko site in southern coastal Athens, where the former Athens airport once operated. A consortium led by local developer Lamda Development was awarded an international tender to transform and exploit the massive area, considered as the biggest real estate project in the Mediterranean. Nevertheless, bureaucratic hurdles and the leftist Greek government's lukewarm attitude to privatizations in 2015 all but put the project on hold. At present, disused airport facilities house up to 5,000 Mideast refugees and assorted other third world nationals that tried to migrant to western Europe after landing on various islands from neighboring Turkey.
Another delayed privatization creditors pointed to is the Egnatia motorway across the breadth of northern Greece.
Meanwhile, the government this week announced several sell-offs of shares of energy-related state utilities, including a large chuck (>30 percent) of listed power company PPC.
Despite the “happy faces” worn by Greek government officials in the days after the Eurogroup meeting and the “road map” unveiled for Greek debt relief, a demand repeatedly pressed by the IMF, the actual agreement is far from concise, and mostly echoes the German position of waiting after 2018 – and the conclusion of the current bailout – for tangible and long-term measures to cut the debt.
On the plus side, Greek officials were relieved that an initial reference in the final text to a goal of a primary budget surpluses of 3.5 percent of GDP through 2028 was avoided.
