Friday 28 October 2016

Greece urged to speed up reforms to get more bailout cash

Published 09/09/2016 | 11:31

Peter Kazimir answers questions upon his arrival for the informal meeting of ministers for economic and financial affairs in Bratislava, Slovakia (AP)
Peter Kazimir answers questions upon his arrival for the informal meeting of ministers for economic and financial affairs in Bratislava, Slovakia (AP)

European creditors have urged the Greek government to speed up the implementation of a series of economic reforms so it can get its hands on the next batch of bailout cash it is due before the end of October.

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Greece, which depends on the money due from the bailout to stay afloat, has recently fallen short of its commitments to reform its economy, stoking some concerns of a renewed flare-up in the country's debt crisis.

Because it has not delivered on the reform promises it has made, it cannot yet get hold of the 2.8 billion euros (£2.3 billion) that is next due from this current phase of its bailout programme.

However, senior European officials at a meeting in the Slovak capital of Bratislava said Greece still had enough time to meet the deadline set to trigger the release of the money.

As part of last year's third bailout agreement, which is potentially worth up to 86 billion euros (£72.6 billion), Greece promised to meet a series of reforms to such things as pensions and labour markets, in return for the money that it needs to prevent going bankrupt and possibly exiting the euro currency.

The latest release of cash will only come after Greece has met 15 "milestones" relating to privatisation, energy sector reform, bank governance and the establishment of the revenue agency.

So far, Greece has only met two of those conditions, with the remainder at varying degrees of implementation.

Though Greek finance minister Euclid Tsakalotos told his counterparts from the 19-country eurozone that the government intends to complete the milestones in a timely manner, the country is unlikely to meet a September 15 deadline.

And while the European ministers do not appear concerned about stretching that deadline, there are limits - the disbursement of the money has to happen by October at the latest.

"More progress is needed and we strongly encourage the Greek government as a whole to speed up the implementation of the remaining milestones," said Jeroen Dijsselbloem, the eurozone's top official.

There was little sense that Greece was lagging to such an extent that the country was facing another clash with creditors.

Slovak finance minister Peter Kazimir, whose country holds the rotating EU presidency, praised Greece's efforts to put its economic house in order but said Athens' job is not done.

"They did a lot, but a lot of homework is ahead of them," he said at the start of a two-day meeting of European finance ministers. Echoing that message, German Finance Minister Wolfgang Schaeuble said that "there is still time" for Greece to meet its commitments.

While Greece has made some progress in reshaping its economy over the past six years that it has been in receipt of bailout money, it remains encumbered by a heavy debt burden because the economy has shrunk by around a quarter over that period, a staggering contraction that sent unemployment, particularly among the young, sky-rocketing.

With its debt standing at more than 175% of national income, the Greek government is hoping to get some relief from its creditors - the International Monetary Fund, which has been one of the country's major creditors over the bailout era, thinks some sort of debt relief is necessary if its involvement is to continue.

Greece's eurozone partners, notably Germany, have said outright debt reductions are not on the agenda but help could come in the form of lower interest payments or extensions to repayment dates.

Tax policies within the EU were also on the agenda at the Bratislava meeting amid calls for an end to corporation loopholes.

The talks are being held just over a week after the European Commission ruled that technology giant Apple did not pay the correct volume of tax in the European Union for more than a decade, a mounting bill that analysts say could constitute 19 billion euros (£16 billion) with interest.

Both Apple and Ireland, the location of Apple's European headquarters, are appealing the ruling, but Pierre Moscovici, the EU's economy commissioner, defended the move saying Europeans "are waiting for multinational corporations to pay their taxes as common people do".

He said he backed the idea of drawing up black list of tax haven countries as a detriment to unfair tax practices.

"The message must be heard," he said. "No more tax havens."

Austrian finance minister Hans Joerg Schelling said it wasn't clear who should benefit if Apple is ordered to pay back taxes, saying other EU nations might "take a look whether the (tax) money is due to Ireland or other countries."

With the EU economy struggling with anemic levels of growth, the European Central Bank has urged governments across the eurozone to do more to improve economic fundamentals.

Mr Kazimir projected optimism nonetheless, declaring "the future is bright".


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