Stournaras prepares to start talks with troika

Crucial negotiations between the Finance Ministry and the chief inspectors of the country’s creditors – known as the troika – get under way on Sunday, with Athens primarily aiming to secure the 1-billion-euro tranche due in mid-October, while on Friday Finance Minister Yannis Stournaras met with Moody’s officials.

The minister explained the state of the country’s economy to the credit rating agency mission and emphasized that Greeks cannot take any more austerity measures. The meeting reportedly took place in a good atmosphere, with the ministry expecting Moody’s to upgrade Greece’s rating soon.

Sunday’s meeting at 3 p.m., as well as those to follow, will be much more difficult. The agenda for the whole of the September inspection will be discussed, with the prior actions needed for the release of the next tranche at the forefront.

Officials note that there has been progress on all fronts, but add that it may take a few more days for all prior actions to be successfully completed.

The first action required for the disbursement of the 1 billion euros next month concerns the restructuring plans for defense industries EAS and ELVO and mining company Larco. The troika is expecting to see a reliable sale plan for Larco, and to make sure that the military section of Hellenic Defense Systems (EAS) and the Hellenic Vehicle Industry (ELVO) that will remain in operation will not run up major deficits. It is only under those conditions that the troika will accept the government’s proposals for the restructuring of the industries.

On Friday Stournaras further met with the deputy director general of the Directorate General for Competition of the European Commission, Gert-Jan Koopman, the technical staff of the troika and representatives of the Defense and Environment ministries. Talks centered on the state funding the aforementioned industries have received in recent years. Sources say that the talks were rather tough, with the Commission insisting on the recovery of illegal state subsidies.

On the new code pertaining to the law professions, the troika continues to oppose certain clauses, but this is not expected to create any significant problems in the negotiations.

The troika appears to be satisfied with the initiatives of the Administrative Reform Ministry for placing 12,500 civil servants in mobility schemes, according to sources. However, the importance of the issue means that the inspection will be particularly detailed.

Another prior action to be examined is the repayment of state arrears to the water and sewage companies of Athens (EYDAP) and Thessaloniki (EYATH). The next few days are set to see significant developments in this direction, while the state and EYDAP have still not agreed on the precise amount of the debt.

All of those four issues will have to be concluded within the next 10 days. The troika heads will depart owing to the Annual Meeting of the International Monetary Fund on October 11-13, while on October 14 the Eurogroup council of eurozone finance minister convenes. Unless a serious problem arises before then, the disbursement of the 1-billion-euro installment will be approved.

Therefore the main issues of the inspection will be broached from October 15. They concern the fiscal gap of the 2015-16 period, the coverage of the funding gap which from mid-2014 to end-2015 is estimated at 10.9 billion euros, and the sustainability of Greece’s public debt.

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