Wednesday 22 November 2017

Greece crisis: Creditors now demanding third wave of reforms before bailout loans release

Former Greek Finance Minister Yanis Varoufakis
Former Greek Finance Minister Yanis Varoufakis
An elderly man pulls his shopping cart in Athens as it was confirmed talks on a third bailout for Greece are facing delays (AP)
Greek Finance Minister Euclid Tsakalotos leaves a handover ceremony of outgoing Deputy Finance Minister Nadia Valavani to newly appointed Deputy Finance Minister Tryfon Alexiadis in Athens, Greece July 20, 2015. REUTERS/Alkis Konstantinidis
The Greek parliament during a late-night emergency session on further reforms demanded by international creditors in return for a third multibillion-euro bailout (AP)
Prime Minister Alexis Tsipras rubs his eyes as the Greek parliament debates the new legislation into the early hours of the morning
Greek banks have reopened but customers still face draconian cash restrictions
Wolfgang Schauble
European Union Commission President Jean-Claude Juncker
Greek Prime Minister Alexis Tsipras arrives at his office in Athens just after flying in from Brussels
Queues outside an Athens bank yesterday

Francesco Guarascio and Renee Maltezou

International creditors want Greece to enact a third wave of politically sensitive reforms before they will release any money to keep the near bankrupt country afloat under a third bailout they began negotiating on Monday.

The government of Prime Minister Alexis Tsipras has pushed two packages of measures through parliament this month as a condition for starting talks on a three-year loan worth up to €86bn to keep Greece in the Eurozone.

Technical talks, delayed for several days by logistical issues, began as former Finance Minister Yanis Varoufakis confirmed he had made secret plans to hack into citizens' tax codes to issue a parallel currency if necessary.

Mr Varoufakis said Mr Tspiras had initially approved contingency planning by a five-person unit in his ministry led by US economist James Galbraith but had refused to give the green light to activate the plan after Greece had to close its banks and impose capital controls on June 28. The outspoken minister, long regarded by creditors as an obstacle to any deal, resigned a week later.

Figures issued by the European Central Bank showed Greek banks lost 6pc of all deposits, worth €8bn, in June alone as previous bailout talks foundered and the leftist government called a referendum to reject the terms.

A spokeswoman for the European Commission said teams of experts from the creditor institutions were now in Athens. "Work has started, meaning that the institutions are talking to the Greek authorities," she said. The talks had been due to start last Friday, but were postponed because of organisational and security issues.

"Negotiations on a Memorandum of Understanding should now progress as swiftly as possible," Commission spokeswoman Mina Andreeva told a news briefing. Both sides say they want a deal concluded before August 20, but Germany, Greece's biggest and most demanding creditor, said there should be no rush.

Talks should be conducted thoroughly and without time pressure, a German Finance Ministry spokesman said, adding that the reforms should be ambitious. In a conference call with the London-based OMFIF think-tank, recorded on July 16 but released yesterday, Mr Varoufakis gave details of his secret planning and also accused German Finance Minister Wolfgang Schaeuble of being "bent on effecting a Grexit".

The institutions involved in the new talks are the European Commission, the ECB and the IMF, as well as the Eurozone's rescue fund, the European Stability Mechanism (ESM). EU officials said the heads of mission of the Commission and the ECB were already on the ground and the new IMF mission chief was due in Athens by Friday to hold talks on a political level.

Ms Andreeva said Greece had delivered "in a timely and overall satisfactory manner" on promises made at a Eurozone summit on July 13 of prior legislation to enable the negotiations.

Among sensitive measures held back from the initial package were curbs on early retirement and changes in the taxation of farmers to close loopholes that are highly costly for the Greek state.


Promoted Links

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Also in Business