High hopes ahead of aid talks

Government officials sought to appear optimistic ahead of Tuesday’s summit of eurozone finance ministers in Brussels but – with Greece’s troika of foreign lenders still in disagreement about how to make the country’s debt sustainable – it remained unclear whether any firm commitments would be given to release crucial rescue funding.

A spokesman for the European Commission, Simon O’Connor, said efforts were being made to reach a “realistic solution,” but officials from the German, Finnish and Dutch governments said they did not expect final decisions Tuesday.

Still, Athens appeared upbeat. Sources close to Prime Minister Antonis Samaras said they expected a tranche of 31.5 billion euros in aid by December 5 and another 13 billion euros in January. Speaking after talks with Samaras, socialist PASOK leader Evangelos Venizelos said that Athens had made good on pledges to the troika and it was the creditors’ turn to act. Democratic Left chief Fotis Kouvelis was more reserved, saying Athens should clinch the aid, then seek growth.

Finance Minister Yannis Stournaras indicated that the government had fulfilled the “prior actions” demanded by the troika by passing two legislative acts. One decree imposes stricter supervision of ministries and state bodies as well as wage cuts or layoffs for department heads who miss their targets. State bodies who fail to meet targets will be obliged to hike rates and taxes to raise revenue. The first decree also foresees the payment of privatization revenues into an escrow account held at Greece’s central bank. The second legislative act foresees cuts to the salaries and pensions of parliamentary employees bringing them into line with other civil servants.

“We are fully ready for Tuesday,” Stournaras said late on Sunday after marathon talks with Samaras. “There are no outstanding issues on our side.”

The government is hoping that eurozone officials will reach a “political decision” on the aid and a provisional decision on how to cover a funding gap created by a two-year extension to Greece’s fiscal adjustment period, as well as on how to make the country’s debt sustainable. The worst-case scenario is that EU and IMF officials fail to resolve a dispute about how to tackle Greek debt sustainability. German Finance Minister Wolfgang Schaeuble and Austria’s Maria Fekter on Monday both repeated their staunch opposition to a new debt haircut for Greece – an option IMF chief Christine Lagarde had been pursuing but is said to have watered down recently.

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