After reaching a deadlock over how to achieve the target of a primary surplus for 2014, talks between the government and its international creditors have come to a temporary halt.
Sources say that the inspectors are expected back in Athens at the end of October as no decision is likely to be made ahead of the formation of the new German government or before a solution can be found on the issue of the Greek program’s funding gap.
Finance Ministry officials noted on Monday that after the completion of the first round of negotiations with the mission of the European Commission, the European Central Bank and the International Monetary Fund – known as the troika – the Greek side estimates that it will take measures worth 500 million euros to achieve the primary surplus planned for 2014, amounting to 2.8 billion euros. The same officials added that the troika believes heftier measures are required, with one estimate raising their impact to 1.5 billion euros.
The ministry insists that no measures affecting salaries, pensions or taxation will be taken, but it has not ruled out structural measures such as the closure of additional state entities in an effort to cut down on spending and restructure the public sector. Officials note that the ministry has presented the troika with proposals for measures to cover the gap the Greek side expects for next year, but no agreement has been reached yet.
The troika left Greece on the weekend without reaching an agreement on any of the four prior actions required for the disbursement of October’s 1-billion-euro tranche. In this context, sources say that this week’s Euro Working Group meeting will not issue the approval required for the installment’s disbursement. The Finance Ministry expects that approval to come at the Eurogroup meeting on October 14. Government officials say that the only real problem at the moment is the fate of defense industries EAS and ELVO and the Larco mining company.