Troika arrives for renegotiation

The representatives of Greece?s international creditors arrived in Athens on Wednesday and the first of their planned tasks is a renegotiation of the whole of the agreement with the Greek government.

The so-called troika is now likely to approve the disbursement of the sixth tranche of loans to Athens, following a written pledge by Prime Minister George Papandreou and Finance Minister Evangelos Venizelos for the full implementation of the agreed measures, with the next target being the agreement on the terms of the new program by mid-November.

Sources suggest that the gap between what the troika has asked for and what the government is delivering has been bridged for 2011 with the measures announced, while the two sides are also very close to reaching an agreement for the 2012 gap (another set of measures worth 500 million euros still remains).

The issue now is to identify the interventions required to cover the gap of about 3 billion euros for 2013 and that of a similar amount for 2014, a total of 6 billion.

The troika officials hope to have completed their monitoring by the start of next week. The first draft of the new budget must be tabled on Monday, with Finance Minister Evangelos Venizelos set to explain Greece?s progress to his eurozone counterparts in the context of the Eurogroup meeting.

Venizelos has stated that the government aims to have the 2012 budget passed by the end of October, but a small delay cannot be ruled out at the moment. Given that the government will now redefine the measures (and possibly the targets) of the midterm fiscal plan, the process may well be completed in mid-November, with the budget to be approved along with the new midterm fiscal plan immediately afterward.

There is no clear timetable regarding the disbursement of the next loan installment, as it is not known when the Eurogroup will issue its approval. A Commission spokesman stated yesterday that there will be an extraordinary meeting of the group of the eurozone?s finance ministers on this issue (possibly on the telephone) within October. This is most likely to happen between October 12 and 15.

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