Finance Minister Yannis Stournaras held a meeting Sunday with representatives of Greece?s lenders, also known as the troika, who informed him that Athens had missed or was off course on 210 targets in its loan agreement and would need to rectify this before receiving any more money.
Sources told Kathimerini that officials from the European Commission, European Central Bank and the International Monetary Fund have informed the Greek government that the earliest it can expect to receive its next loan tranche is in mid-September. This means Greece, which was due to run out of money later this month, will have to find a way to stretch its finances and that there will have to be a special arrangement for a government bond held by the ECB, which matures on August 20. Kathimerini understands that either a clause allowing it to be paid a month later will be triggered or it will be covered by the European Financial Stability Facility (EFSF).
In the meantime, the troika expects the Greek government to speed up a range of reforms. These include privatizations, the liberalization of the energy market and the overhaul of the tax system. However, the government will also have to proceed with 12 percent cuts to some public sector salaries. This applies to the so-called ?special wages? that apply for some civil servants, such as judges and those serving in the military. The loan agreement calls for these cuts to come into effect in September, saving the public coffers 200 million euros.
The troika also wants to see the appointment of a permanent secretary to oversee tax revenues and for 40 special inspectors to be responsible for chasing companies and individuals that owe large amounts to the state. The lenders are also waiting for the completion by the Center of Planning and Economic Research (KEPE) of an evaluation of public spending, which was held up by the two recent elections.
EC, ECB and IMF officials also rejected any talk of extending the fiscal adjustment period from the end of 2014 until progress has been made with the existing targets. This means the government will still have to draw up plans to save 11.5 billion euros over the next two years. Troika officials are due to visit the Council of State Monday to find out about legal obstacles to the completion of tenders for major public works.