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Experts forecast no further pressure from creditors on Greece after Brussels' warning

TAGS: Finance, Analysis

Greece's creditors urged Athens on Wednesday to speed up the agreed reforms, otherwise it may miss out on measures adding up to 1 billion euros. Meanwhile, experts told Xinhua it is unlikely that pressure on Greece will increase this year.

In the European Semester report the European Commission issued in Brussels, in the context of Greece's second post-bailout assessment, the country is found to have lagged in the implementation of several of the prior actions required, despite the progress its economy has recorded after exiting the bailout program last August.

The Greek government is now facing a race against time to fulfill all 16 requirements before the March 11 Eurogroup meeting of eurozone finance ministers expected to decide on the disbursement of some 750 million euros to Athens from the profits of eurozone central banks's holding of Greek bonds.

That is added to the benefit of just under 250 million of euros Greece will save from a decision that will waive this year's interest rate increase due on the loans from the second bailout Greece secured in 2012.

The report identified a number of shortfalls in reform realization, particularly on issues such as the creation of a new framework for the protection of debtors' primary residence, the repayment of state debts to suppliers and taxpayers, and the implementation of privatizations. All this is in the context of the upcoming European election in May and the parliamentary election in Greece some time up to October.

"Our problems have not been resolved. The more we delay their tackling, the more difficult their solutions will be," said Giorgos Stratopoulos, financial analyst at Athens-based think tank E-Kyklos.

"The government is delaying reforms, for election purposes too, but the main problem has been the non-ownership of the reforms by this government. This renders more likely the failure to meet the growth target set for this year," he told Xinhua.

His view was shared by Dimitris Kenourgios, University of Athens Associate Professor. "With the general election just a few months away, both the financial conditions - as the Commission report notes - and the political ones are not good, with the climate being toxic," he said.

Nikolaos Frangos, Alternate President at state-funded Center of Planning and Economic Research (KEPE) disagreed, saying that "The prospects for the economy are positive, I believe we will achieve the growth rate the budget provides for."

He estimated that "there is enough time for the pending actions to be completed within schedule," while Kenourgios counters that "there are many things left to be done and the two weeks remaining are not enough."

Where all experts Xinhua has contacted agree on is that Greece's creditors will not put any further pressure on Athens after this warning.

This is despite the dislike reported among creditors on unilateral actions by the Greek government, such as December's announcement for a six-month extension of the 30 percent value-added tax discount for the Eastern Aegean islands that have suffered most from the influx of refugees, and the 11 percent hike to the minimum wage as of Feb. 1.

Frangos, also a Professor at the Department of Statistics of the Athens University of Economics and Business, told Xinhua that "it appears unlikely the creditors will harden their stance toward Greece due to its decisions. After all, decisions such as the minimum salary and the VAT discount were good decisions that have also been well documented and explained to the creditors."

Experts believed that this May's European election will play its part too.

"I do not expect the creditors to harden their stance to Greece. They have already softened their attitude and I do not see that changing, with the European elections in view too," says Stratopoulos.

Kenourgios adds that "the Europeans may leave it there, in this yellow card of warning, due to the European polls. There will be no stronger reaction to Athens. There will also be some moves by the Greek government so as to smoothen things out. Athens will not continue on unilateral moves and will agree to softer solutions."

Consequently next month's Eurogroup is likely "to issue a conditional approval of Greek progress as the ministers would not want Greece to be in the headlines again for the wrong reasons and offer an argument to populist parties ahead of May's European elections," forecasts Kenourgios.

Stratopoulos agreed that the second post-bailout assessment "may close in March's Eurogroup meeting with asterisks about the pending issues that remain unfulfilled, as has also happened in the past."

[Xinhua]

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