The three mission chiefs representing the country’s international creditors are due back in Athens on Monday to launch a review of the country’s third bailout amid concerns that the bulk of so-called prior actions have yet to be completed.
According to sources, only around 20 percent of pending economic reforms have been implemented.
Greek authorities have pushed through a series of labor, pension and tax reforms, though more work is needed in opening up closed professions and pushing a lagging privatizations drive.
In other areas, very little has been done. Talks between Greek government officials and foreign auditors are expected to focus on faltering efforts to reduce the high percentage of bad loans held by Greek banks and a dragging evaluation of the civil service.
Greece’s creditors are also said to be concerned about plans heralded by the government last week to distribute some 1 billion euros from an anticipated budget surplus this year to Greeks on low incomes.
A decision by Greece to sign a deal with the US to upgrade its fleet of F-16 fighter jets poses another headache for lenders, as it remains unclear what its impact on the budget will be.
A representative of the creditors said the third review of Greece’s bailout would be pivotal for three key reasons: firstly its completion will unlock further crucial rescue loans, secondly it will send a strong signal to global markets and investors that Greece is on the right track to economic recovery, and thirdly it would allow tough discussions on debt relief to take place in an atmosphere of relative calm.
According to an official with knowledge of the negotiations, one scenario would be the completion of the review without the participation of the International Monetary Fund, the second – and least desirable – would be the extension of the review, and the third is for Greece’s European creditors to take some meaningful action on Greek debt and the country’s banks, paving the way for the IMF’s full participation in the bailout.