BUSINESS

Creditors have grave concerns on Greece's compliance

ELENI VARVITSIOTIS

TAGS: Finance

Greece’s creditors expressed disappointment regarding their recent visit to Athens during Thursday’s session of the Euro Working Group.

The meeting concluded that the second compliance report “is not going very well,” and with the creditors sticking to the same deadline (mid-February for the completion of the prior actions) there is huge pressure for the government to conform to requirements.

The point that generated the greatest concern on the part of the creditors – especially the European Commission, which is usually friendly toward the government – was the announced hike in the minimum wage.

“Not even the Greek experts had proposed a minimum salary hike of 11 percent,” the meeting heard, as the eurozone’s senior finance ministry officials appeared surprised at the increase level Athens decided on.

As they said during the course of the session, while the role of the Commission may no longer be to approve such decisions or not, such an increase is not beneficiary: “It may give a bit of a push to the economy through the increase in consumption, but competitiveness and growth are set for a blow,” sources from the Commission said.

Another source of concern that was also expressed on Thursday by the European Central Bank was the state of Greek lenders: “The Greek government needs to take action,” the ECB representative said, as the local credit sector’s situation “is not positive.”

As far as the European Stability Mechanism is concerned, the reduction rate of bad loans has been disappointing and is putting domestic banks at risk; the ESM is also worried that the announced hike in the minimum wage is not proportionate to the country’s growth rate, but much higher.

The creditors further blasted Athens for its lack of proposals, such as for the scheme to succeed the Katseli law which provides protection to borrowers’ primary residences. They also voiced concern about the delays in the implementation of the 16 prior actions, as “there is still much left to be done,” and the slow repayment of dues to suppliers and taxpayers.

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