Time to deliver on promises

The payment of the fourth tranche of money to Greece from the European Union and International Monetary Fund support mechanism in February will depend on the government’s success in meeting its budget targets in the coming months, particularly in the area of cost-cutting. The latest budget foresees cuts in state-owned enterprises (DEKOs), defense and the central government, totaling 6.5 billion euros. In order for Greece to reach this goal, it will need to show it has the determination and ability to implement control mechanisms and to restructure state-owned businesses and the public sector. Once the government convinces its lenders that it has changed the way the public sector operates, then a plan to extend the repayment period on the 110-billion-euro EU-IMF loan will also go ahead. Finance Minister Giorgos Papaconstantinou said yesterday any extension to Greece’s repayment obligations should come as a reward for budget-cutting efforts and shouldn’t be a substitute for measures not taken. «If it comes, it should come as a reward for what has been done, not as a substitute for what hasn’t been done,» he told a conference in Frankfurt. The minister also ruled out the option of a debt restructuring as «it would send the wrong message. It would not solve anything and it would harm the other periphery countries.» At the same conference, International Monetary Fund Managing Director Dominique Strauss-Kahn said he’s confident Greece is on the right path to tackle its problems. «I am very confident in the possibility for Greece to go back on track,» Strauss-Kahn said. The government «didn’t lose the election, that is very important.» Greece’s representative at the IMF, Panagiotis Roumeliotis, said that Greece and the IMF view as «very positive» the possibility of extending the repayment period of the loan. Talks on pushing back the repayment period on the 110-billion-euro loan have already started, according to sources, which said that attempts are being made to reach an agreement on the issue ahead of the disbursement of the fourth tranche.