ECONOMY

Four obstacles to review completion

four-obstacles-to-review-completion

Athens and its creditors will need to reach an agreement on four thorny issues – namely the social security reform, the fresh fiscal measures, the bad loans and the new sell-off fund – for the first bailout review to head to a successful conclusion. These issues will need to be concluded in a way that will also satisfy the International Monetary Fund, while the eurozone yesterday sought to distance itself from comments published by a senior IMF official on Thursday.

The negotiating teams of the government and the creditors are continuing their talks – albeit from a distance – aiming at convergence on the major issues so that the heads of the creditors’ missions can return to Athens as early as possible and the review be completed.

The creditors have made it clear there needs to be some tangible progress for the monitoring to be completed and that the government must fulfill its pledges.

“A particularly difficult point remains the pension reforms,” German Finance Minister Wolfgang Schaeuble said in Brussels on Friday: “The system of old age provision must be made sustainable.”

“We have yet to see a credible plan for how Greece will reach the very ambitious medium-term surplus target that is key to the government’s plans for restoring debt sustainability,” Poul Thomsen, head of the IMF’s European Department, wrote in a blog post on Thursday.

“A plan built on overoptimistic assumptions will soon cause Grexit fears to resurface once again and stifle the investment climate,” wrote the former head of the IMF’s representation in Athens.

European Commission spokeswoman Annika Breidthardt kept some distance from Thomsen’s comments, saying that “the European institutions are still working on a measures package for the fiscal targets agreed in the bailout to be fulfilled.”

It echoed the rather more optimistic statements by Economic and Financial Affairs Commissioner Pierre Moscovici and Eurogroup head Jeroen Dijsselbloem on Thursday, who said the review will soon come to a close.

Government sources reacted to Thomsen’s comments, saying that “he is effectively asking for the implementation of a different program to the one that has been agreed.”