Euro Zone Crisis

Greece sees Monday deal on EU-IMF rescue funds

PUBLISHED : Monday, 08 July, 2013, 12:22pm
UPDATED : Monday, 08 July, 2013, 12:22pm

Greece and its international creditors hope to reach a deal by Monday on reforms including thousands of job cuts needed for the debt-laden nation to unlock further aid worth 8.1 billion euros (HK$79.9 billion).

“We have made substantial progress,” Poul Thomsen, the International Monetary Fund’s representative, told reporters in Athens on Sunday.

“I hope we will reach an agreement on Monday before the Eurogroup meeting,” Thomsen said, according to the state-run Athens News Agency.

Greek Finance Minister Yannis Stournaras was also “optimistic that tomorrow (Monday) we will have an agreement.”

Greece needs to come to an accord with the troika of international creditors -- the IMF, the European Union and the European Central Bank -- by Monday, when eurozone finance ministers are due to meet to decide if the bloc should release the next instalment of rescue funds worth 6.3 billion euros (HK$62.1 billion).

The marathon talks which began last month will now move from Athens to Brussels up until the start of the Eurogroup meeting.

“The minister and the troika are leaving for Brussels at 1400 GMT today and the talks will continue on the plane,” a finance ministry source told AFP.

The IMF is also due to decide by the end of July whether to disburse its scheduled contribution of 1.8 billion euros (HK$17.8 billioin) to the bailout kitty.

The funds are necessary as Greece must redeem three-month and six-month debt worth 6.6 billion euros (HK$65.1 billion) by mid-August.

French Finance Minister Pierre Moscovici also sounded upbeat that a deal would emerge to release the next rescue funds.

“I am confident that we can reach a common understanding with Greece, an agreement on the financing of the programme,” Moscovici told reporters on the sidelines of an economic meeting in the southern French city of Aix-en-Provence.

Among reforms being negotiated are 4,000 state job cuts by the end of the year, which Athens had pledged.

Greece must also redeploy 25,000 civil servants across its vast bureaucracy. These include some 2,000 teachers Athens has proposed moving to other services.

Another 3,500 local police are to be incorporated in the national forces, a proposed move that has sparked strong opposition from local administration staff.

“The so-called negotiations once again result in new measures for layoffs, school and hospital shutdowns, taxes and wage cuts,” Greece’s main opposition Syriza party said in a statement.

Local police have gone on strike until Tuesday over their redeployment, which they say is unconstitutional.

“Now even permanent staff are being fired,” said union chief for Athens city staff Vassilis Polymeropoulos, citing speculation that up to 30 per cent of municipal police will be axed.

Athens Mayor George Kaminis was assaulted on Sunday by suspected staff unionists, his office said, amid protests over job cuts tied to Greece’s bailout rescue.

Kaminis was leaving a mayors’ meeting in Athens when he was heckled and struck by members of a unionist crowd protesting against layoffs, reports said.

The mayor’s office said he had been “physically attacked” without giving details and accused the union of local staff of leading its members “down a dangerous road”.

The mayor briefly checked himself into hospital but was not believed to be seriously hurt.

The latest cuts will be enshrined in a new law to be submitted to parliament on Tuesday.

Since 2010, the EU and the IMF have committed a total of 240 billion euros (HK$2.37 trillion) to the heavily indebted country.

In exchange, Greece has agreed to a series of reforms including a commitment to raise revenues by offloading state assets.

But the government has been forced to once again scale back the expected revenues from its privatisation drive for this year to 1.6 billion euros (HK$15.8 billion) from 2.6 billion euros (HK$25.6 billion) earlier forecast.

The missing billion is to be rolled over to next year, a privatisation official told ANA.

Athens failed in June to sell Greece’s gas distributor DEPA after Russian giant Gazprom pulled out of the bidding process.

Greece has pledged to raise 9.5 billion euros (HK$93.7 billion) in asset sales by 2016, just under a fifth of the original target of 50 billion euros (HK$493.2 billion).