Greece’s government and international lenders resumed talks in Athens on the country’s fiscal and reform progress, with the hope that the review may be concluded by May.
Prime Minister Alexis Tsipras, who has a fragile parliamentary majority, wants to conclude the review swiftly to start talks on debt relief hoping to convince an angry public that their sacrifices are paying off after six years of austerity and lure back investors.
European Union and International Monetary Fund inspectors discussed the agenda of the review with Finance Minister Euclid Tsakalotos and were scheduled to meet Labour Minister George Katrougkalos later to discuss pension reforms. Fiscal issues were expected to be discussed on Thursday.
The review was interrupted in early February due to differences among the institutions over the estimated size of a fiscal gap by 2018, but also disagreements with Athens on the depth of the pension reform and the management of bad loans.
Projected fiscal gap
Athens has pledged to cut pension spending by 1% of GDP this year and reach a primary surplus of 3.5% by 2018. It was not clear if the lenders had reached a consensus on the projected fiscal gap which could force Athens to cut pensions further, despite its pre-election promises.
Eurozone finance ministers acknowledged this week that a debate on debt relief was coming up soon, but Greece should first implement pension and tax reforms, set up an independent revenue agency and deal with non-performing loans. German Finance Minister Wolfgang Schaeuble said he expected the review would be completed by early May.
“It’s positive that there is an end date for the bailout review, but also for the negotiation on debt relief,” a government official said.
Debt relief discussion
The heads of the institutions’ missions in Athens and the government’s economic team will have another meeting on Thursday at 17:00, a senior source within Greece’s economic team revealed, saying the meeting will focus on fiscal issues, following meetings on Wednesday to draw up a programme for one week. At the end of the week, the representatives of the country’s creditors will then decide whether they need to stay in Athens any longer.
Finance ministry sources said that the meeting with the institutions will take place at 17:30 on Thursday to discuss changes in income tax, while at 19:30 they have scheduled a discussion on developmental strategy in the agricultural sector.
The Greek side wants the review to complete within March or early April and the discussion for the debt relief to start as soon as possible.
Source: Reuters
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