Exclusive: Greece has three days to deliver or face consequences - EU officials

BRUSSELS/ATHENS Wed Jul 3, 2013 1:22am IST

1 of 9. A Greek flug flutters at the top of the Acroplis hill in Athens July 2, 2013.

Credit: Reuters/John Kolesidis

Related Video

Related Topics

BRUSSELS/ATHENS (Reuters) - Greece has three days to reassure Europe and the IMF that it can deliver on conditions attached to its bailout in order to receive its next tranche of aid, four euro zone officials said on Tuesday.

The lenders are unhappy with progress Greece has made towards reforming its public sector, a senior euro zone official involved in the negotiations said, while another said they might suspend an inspection visit they resumed on Monday.

Athens, which has about 2.2 billion euros of bonds to redeem in August, needs the talks to conclude successfully.

If they fail, the International Monetary Fund might have to withdraw from the 240 billion euro ($313 billion) bailout to avoid violating its own rules, which require a borrower to be financed a year ahead.

That would heighten the risk that concerted efforts by policymakers over the past nine months to keep a lid on the euro zone crisis could unravel, at a time when tensions are rising in other troubled debtor countries.

Athens is scrambling to bridge differences with troika inspectors and wrap up the review by the end of this week, a Greek coalition official who took part in the talks told Reuters on Tuesday.

"Negotiations must be concluded by Saturday or Sunday at the latest in order to have a (troika) staff agreement that will be discussed at a Eurogroup meeting on Monday," said the official who declined to be named.

The two sides had yet to agree on how to plug a fiscal gap and Athens has missed a June deadline to place 12,500 state workers into a "mobility scheme", under which they are transferred or dismissed within a year.

Tensions over bailout terms have also mounted in Portugal, where Finance Minister Vitor Gaspar, the architect of its bailout measures, resigned on Monday and was followed on Tuesday by Foreign Minister Paulo Portas.

In Italy, Prime Minister Enrico Letta called a government meeting after a coalition partner threatened to withdraw, demanding faster moves to make the economy more competitive.

Athens and its creditors resumed talks on Monday to unlock 8.1 billion euros ($10.6 billion) of rescue loans, after a two-week break during which the government almost collapsed over redundancies at state broadcaster ERT.

"All agreed that Greece has to deliver (pledges) before the Eurogroup on Monday. That's why they must present again on Friday," a second source told Reuters.

Euro zone finance ministers are scheduled to meet on July 8 and discuss Greece, which is in its sixth year of recession with unemployment at record highs.

MISSED DEADLINES

"It is a very difficult negotiation," a senior Greek official participating in the talks said. "We're moving fast to wrap up as many issues as possible as soon as possible."

But Greece's financial overseers - the IMF, the euro zone and the European Central Bank - were unlikely to be able to conclude their review in July and might need to suspend the visit and resume it in September, a senior euro zone official said on condition of anonymity.

Representatives of the EU-IMF-ECB "troika" have been holding serial meetings with government ministers in Athens on a host of outstanding issues. If talks are not concluded by the middle of the month, Athens risks missing the installment, the Greek official added.

Athens and the troika are at odds over an unpopular property tax and a sales tax for restaurants, while a shortfall of more than 1 billion euros has emerged at state-run health insurer EOPYY, meaning automatic spending cuts may have to be agreed to bring it back on an even keel.

The government plans to ask its creditors to lower this year's privatization target of 2.6 billion euros after failing to find a buyer for natural gas company DEPA.

The beleaguered government of Prime Minister Antonis Samaras has ruled out imposing any new austerity measures. Unemployment has hit a record 27 percent and Greeks have lost about a third of their disposable income as a result of bailout policies.

($1 = 0.7672 euros)

(Reporting by Reuters bureaus; Editing by John Stonestreet/Ruth Pitchford)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Sundar Pichai Elevated

Sundar Pichai Elevated

Google's Pichai to oversee major products and services.  Full Article 

Need For Reforms

Need For Reforms

Euro zone risks "relapse into recession" without structural reforms - Draghi.  Full Article 

Diwali Sales

Diwali Sales

Gold sales jump about 20 pct for Diwali - trade body  Full Article 

World Bank Rival

World Bank Rival

Three major nations absent as China launches W.Bank rival in Asia  Full Article 

Wal-Mart India

Wal-Mart India

Murali Lanka appointed as Wal-Mart India operations chief  Full Article 

Health Of Lenders

Health Of Lenders

25 European banks set to fail health checks - sources.  Full Article 

Special Report

Special Report

Why Madrid's poor fear Goldman Sachs and Blackstone  Full Article 

U.S. Economy

U.S. Economy

Spectre of no-inflation world looms over Fed's return to normal  Full Article 

India Insight

India Insight

Kalki Koechlin on her role as a disabled girl in “Margarita, With a Straw”  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage