Imminent return of troika to Athens spurs activity

Greece’s Finance Ministry is expected to send the troika its revised plans on the overhaul of Hellenic Defense Systems (EAS) and the Hellenic Vehicle Industry (ELVO) and mining company Larco from Monday, as representatives of the country’s creditors prepare to return to Athens for the latest review of the Greek adjustment program.

The government is working on a new plan after the troika last week rejected plans to liquidate the companies while they are in operation, suggesting that EAS and ELVO should be closed down and Larco split in two and sold to investors. Greece’s lenders are pushing for a solution by the end of this month, arguing that the companies, which lose about 150 million euros a year, can no longer be a drain on taxpayers’ money.

The troika’s technical team is due to return to Athens on September 16, before the chief representatives of the European Commission, European Central Bank and International Monetary Fund arrive in Greece on September 22. The aim of their visit will be to check on Greece’s fiscal and structural reform progress ahead of a Eurogroup meeting on October 15, by when Greece wants to have secured the release of its next bailout tranche, worth 1 billion euros.

Apart from finalizing a plan for EAS, ELVO and Larco, the Greek government will also have to complete the procedure of placing 12,500 civil servants in a mobility scheme by the end of September and settled any debts to the Athens and Thessaloniki water companies, EYDAP and EYATH, which are due to be privatized.

It is expected that if everything progresses well and the loan is disbursed, Greece will then begin discussing with its lenders how to cover the funding gap that is due to emerge from next year and what kind of new fiscal measures may be needed.

Greece believes it will need 2.5 billion euros in new measures for 2015 and 2016, while the troika puts the figure at 4 billion. Athens is hopeful that a shallower-than-expected recession this year will mean that even its estimate will prove larger than what is actually needed. In either case, the Finance Ministry is adamant that the savings will come from structural changes rather than cuts or taxes.

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