Initial information indicates that the troika has interrupt discussion in Athens, without having completed its review of Greek economy for the release of the sixth aid tranche. Several sources note that the issue would be addressed by European FinMins and state heads.
The dispute focuses on the deficit: the government insisted that recession causes the widening of deficit from 7.6% to 8.1% of GDP in 2011, a figure that could be covered without additional measures.
But troika officials estimated the deficit to reach 8.6% of GDP, taking into account deviations in government policy.
They requested additional measures of €1.7 billion, estimating that the gap comes from the revenue shortfall of €1.1 billion and deviation of €600 million in expenditure.
The difference is large and the government attempted to trim it. Also, Greece tried to convince the troika to let a quarter pass in order to allow measures of September pay off.
Under the pressure for immediate measures, FinMin E.Venizelos decided after consultation with the Prime Minister to refuse to consent. Ministry sources note that there was a disagreement in fiscal field, and the international inspectors would return in a 10-day period.
This development reshapes the schedule for the release of the sixth instalment. It has been already postponed for late September, while the initial date was September 15.
According to sources, privatization program was the second issue of dispute. The memorandum of understanding provides for revenues of €1.3 billion through privatizations, but severe stock market conditions forced Greece to ask for extra time.
The troika released a statement on the recent economic developments and reviewing policy implementation in the context of the fifth review of Greece΄s economic program.
According to the announcement, “the mission has made good progress, but has temporarily left Athens to allow the authorities to complete technical work, among other things, related to the 2012 budget and growth-enhancing structural reforms.
The mission expects to return to Athens by mid-September, when we expect the Greek authorities to have completed the technical work, to continue discussions on policies needed to complete the review.”
(source: capital)
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