Having secured reluctant Parliamentary approval of a $17.45 billion spending cut and tax hike plan demanded by international lenders, Greek Prime Minister Antonis Samaras is preparing for a week of meeting European Union leaders in the hopes they will sign off on a long-delayed $38.8 billion installment needed to keep the economy going.
Finance ministers of the 17 countries the Eurozone which use the currency – including Greece – are set to meet in Brussels on Nov. 20 and EU leaders will be holding a two-day session on Nov. 22-23 in which the ubiquitous question of Greece’s debt dilemma will again top the agenda.
The government, in preparation, has reportedly finalized some details regarding structural reforms and fiscal monitoring as EU leaders remained split over how to proceed and what options to consider to keep Greece viable. Samaras and Finance Minister Yiannis Stournaras met to agree on pending changes demanded by the Troika of the EU-International Monetary Fund-European Central Bank.
The Finance Ministry has been given greater powers to oversee other ministries, more control over the finances of local authorities and public enterprises (DEKOs) where executives face wage cuts or redundancy if they fail to meet the financial targets. Any municipalities that fail to get their finances in order will have to increase their revenues from taxes and rates rather than receive more funding from central government, according to the legislative act.
The newspaper Kathimerini reported that the government also agreed on some “prior actions” demanded by the Troika, which wants licensing for vocational colleges and installing tracking devices on trucks that transport fuel.
European Stability Mechanism Managing Director Klaus Regling expressed his opposition to the idea of a further debt write-down for Greece – with losses on its public lenders. In an article in the German daily Handelsblatt, he said that public sector haircuts should only happen in “extreme circumstances” and that Greece would be able to reduce its debt by a third through low interest rates on its bailout loans.
Greece, which has already undergone the biggest sovereign restructuring in history after private investors forgave more than 100 billion euros ($127.6 billion) of debt in March, may need another write- off after the government enacts economic reforms, ECB Governing Council member Jens Weidmann said at an event in Berlin on Nov. 16.
Luxembourg Prime Minister Jean-Claude Juncker, who oversees the finance chief meetings of the 17 euro nations, last week predicted a “definite decision” on releasing the next aid payment. He said the ministers might have to consult once more, possibly by teleconference, by the end of November to formally sign off on the updated rescue package.
The Eurozone finance ministers meeting is crucial where the ministers will attempt to re-engineer the current bailout without asking taxpayers to put up more money. The talks are “likely to be tense as all players set out their positions,” Thomas Costerg, an economist at Standard Chartered in London, told Bloomberg. “Greece’s debt can is likely to be kicked further down the road, but we could see some constructive statements.”
EU leaders will likely debate that at their summit, where they also have to take up dispute concerning the bloc’s budget, threatened by a dispute with the United Kingdom.