Finance Minister Yannis Stournaras is due in Brussels again on Monday – for the fourth Eurogroup meeting in as many weeks – where he is expected to present to his eurozone peers details of a bond buyback scheme that must succeed if Greece is to clinch a crucial tranche of rescue funding later this month.
Despite the expressed reluctance of Greek banks to participate in the buyback, the aim of which is to reduce Greece’s debt burden by 20 billion euros, they are expected to join the scheme as they cannot afford to miss out on recapitalization funds earmarked for them in the next 34.4-billion-euro tranche of rescue loans.
Stournaras has insisted that the scheme is voluntary but has sought to apply pressure on banks and other bond-holders by stressing that its success is “a patriotic duty.”
He is to return to Brussels for another Eurogroup summit on December 10, where the participation in the scheme is to be assessed before a decision is made on the release of rescue loans to Greece by December 13.
In the meantime the minister faces a gruelling week at home. His draft tax code – which abolishes breaks for large families, self-employed professionals and farmers – must be submitted in Parliament soon. It is one of a handful of remaining “prior actions” demanded by the troika in exchange for continued financial support. But the new legislation faces opposition not just from the junior partners in the coalition – socialist PASOK and Democratic Left – but also from several conservative lawmakers, meaning its passage through Parliament is unlikely to be smooth. Stournaras has said he will consider countermeasures as long as fiscal targets are respected.
According to sources, the government is keen to finish with the bond buyback and secure crucial funding so the focus can shift to the repayment of state arrears and the acceleration of privatization projects. A cabinet reshuffle is expected before Christmas with PASOK and Democratic Left expected to appoint several cadres to key posts. Certain ministers who are resisting reforms – such as Administrative Reform Minister Antonis Manitakis who opposes a fast-track redundancy scheme for civil servants – are likely to go.
There are fears that if all does not go according to plan and the government finds itself forced to take new austerity measures early next year, the coalition will buckle under the strain and snap elections will be called. Already, leftist SYRIZA, which is leading in opinion polls and opposes the terms of Greece’s foreign bailouts, is planning for such an eventuality with speculation about elections featuring at its party congress over the weekend.
Meanwhile European officials sought to bolster the battered image of Greece, ahead of yet another Eurogroup summit. “At last, I can see in the Greek government the determination to overhaul the country, to create modern structures,” German Chancellor Angela Merkel told Bild. European Economic and Monetary Affairs Commissioner Olli Rehn, for his part, said he was confident that Greece would receive rescue funding without delay.