To avoid upsetting world markets as U.S. President Barack Obama seeks re-election, Greece’s international lenders may delay a crucial report on additional funding until after Americans go to the polls on Nov. 6, the news agency Reuters reported, although Greek officials denied it.
The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) is preparing its review of Greece’s progress on reforms demanded in return for bailout monies, including a $38.8 billion last installment from a first package of $152 billion.
A second bailout, of $172 billion, is on hold until the uneasy coalition government led by Prime Minister Antonis Samaras makes another $14.6 billion in cuts and imposes more of the same kind of austerity measures that have worsened the country’s five-year recession, putting nearly two million people out of work, closed 68,000 businesses and is shrinking the economy by 7 percent a year.
Reuters said the delay is being considered to avoid shocking markets in case the report indicates that funding could be further put off or even cancelled, which could push Greece into default, out of the Eurozone and even jeopardize the whole financial bloc of the 17 countries using the euro.
Samaras is trying to convince his reluctant coalition partners to go along with additional cuts at the same time he is trying to please Troika officials and show he is going along with all their demands. Some two billion euros, or $2.6 billion, in cuts, is still unresolved.
Finance Minister Yiannis Stournaras, who is the government’s point man in talks with the Troika, said, “The negotiations are difficult. We’re doing everything possible to minimize the social cost, especially for the lower income groups.”
Samaras is facing social unrest over his plan to impose most of the cuts on workers, elderly and the poor, which prompted a series of strikes and protests and as the country’s two largest labor unions representing public and private workers have called general strike for Sept. 26, giving the Premier his first test since he narrowly won office in June, but without enough of the vote to control Parliament, forcing the New Democracy leader to make a deal with his rivals, the PASOK Socialists and tiny Democratic Left and set up a coalition.
Greece has a Sept. 28 deadline to present its final budget plan to the Troika, who will use it as part of their report that decides whether more money will be forthcoming. Greece is dependent on the aid, without which it won’t be able to pay workers and pensioners.