Fresh on the heels of the Eurozone approving another 4 billion euros ($5.3 billion) in loans and aid, a European Commission official acknowledged that Greece faces a funding gap of some 3.8 billion euros ($5.04 billion) next year but that officials aren’t worried about it.
Prime Minister Antonis Samaras has vowed not to impose any more austerity measures but may have no choice if the hole in the economy can’t be fixed some other way.
The disbursement of the next tranche was agreed during a conference call of the Euro Working Group, which advises Eurozone finance ministers.
The technical experts cleared the payment after the Greek Parliament passed an amendment that allowed it to complete the last of 22 “prior actions” that had been agreed with the Troika and also had removed an exemption that would have allowed 80 unidentified public workers to escape being put into a so-called mobility scheme where as many as 40,000 workers could be transferred or fired over the next two years.
Greece is scheduled to receive 2.5 billion euros from the European Financial Stability Facility (EFSF) and another 1.5 billion euros from the profits made by Eurozone central banks that bought Greek bonds. The transfer still needs the approval of Parliaments in the other 16 Eurozone countries but they’ve always relented.
Once that’s done, the government said it would make public final details of its deal with the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB.) The IMF’s board is also due to meet on July 29 to decide on the release of another 1.8 billion euros ($2.39 billion) to Greece.
In Brussels, a Commission official told journalists that the Greek program remained fully funded until the end of July next year but that another 3.8 billion euros would be needed to see out 2014.
It was believed the issue would be put off until the fall, after the German national elections where Chancellor Angela Merkel, who has backed Greek aid but at the cost of harsh austerity measures, is anxious to avoid social unrest in Greece. Other talk centered around another bailout or more reforms to close the gap although those weren’t revealed.
The spokesman said the funding shortfall had largely been created by the refusal of Eurozone central banks that hold Greek bonds to roll them over with less return, fearing that this would be considered “monetary financing” of a member state and giving a break to Greece while making residents of other countries pick up the tab.
The Commission official said that any further discussion about restructuring Greek debt would be put off until April next year, when the EU’s statistical arm, Eurostat, would be able to confirm whether Greece had produced a primary surplus this year. Greece’s Eurozone partners said they would consider moves to lighten the country’s debt load if Athens achieves a primary surplus.
Greece in 2011 imposed 74 percent losses on banks and investors, including those in the Diaspora who had put their faith and money in their homeland only to be burned, and the government has been floating the idea of doing the same to public lenders and making other Eurozone countries pay the bill for generations of wild overspending and packing public payrolls in Greece with needless workers.
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