Stournaras Sees Troika Deal Coming

Despite a breakdown in talks with international lenders over delayed reforms and how to fill a big hole in the 2014 budget, Greek Finance Minister Yannis Stournaras said he expects they will release a one billion euro ($1.37 billion) installment before the end of the month, and not sometime early in 2014 as it seemed.
Stournaras said he believes he will also be able to strike a deal with envoys of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) Troika that’s been held up over a series of unfinished business, including how to deal with the country’s money-bleeding defense industries, lagging public worker firings,
Speaking to CNBC on the sidelines of a meeting of European Union finance ministers in Brussels, Stournaras said “the milestones seem to be okay so we expect the disbursement of the installment by the end of the year,” contrasting with statements earlier in the day by Eurogroup Chairman Jeroen Djisselbloem, who said that it would be “very, very hard if not impossible” for the Troika’s review to be finalized by the end of the month.
The Troika’s team was set to be back in Athens on Dec. 10 to continue negotiations with the government. Stournaras, who is always upbeat and optimistic even in the depths of a harsh recession and crushing economic crisis that has created record unemployment and pushed 20 percent of the populace into poverty, said he sees a deal by New Year’s Eve.
He said Greece would be on a roll that would pick up in 2014. “I’m very optimistic about next year. We’re going to have positive growth so we can have… limited [market] access next year, but it will be the first time since 2010 so it will be very important,” Stournaras told CNBC.
He downplayed the size of an estimated fiscal gap next year which the Troika puts at as much as 2.9 billion euros but which the government first said was only 500 million euros and then said didn’t exist at all, befuddling the inspectors.
Now though, Stournaras said there is a hole but the government believes it can be filled without resorting to more austerity measures that Prime Minister Antonis Samaras has vowed never ever again in his life to impose. “We have a very big output gap, this gap closing slowly. This closing generates growth and driving forces next year will be investment and exports,” Stournaras said.
“I have explained the social limits of austerity measures and this is why we don’t want to take further austerity measures,” he told CNBC what he told the Troika, which said it only cared whether banks could be repaid.
Stournaras and Samaras have little support. Talking to reporters after the Eurozone finance chiefs talked, Djisselbloem said he hoped the preconditions would be fulfilled for the release of the next tranche of rescue funding to Greece, but said it would be “very, very hard if not impossible” for the Troika’s review to be finalized by the end of the month.
Earlier German Finance Minister Wolfgang Schaeuble said that while Greece was “on a good track overall” that “many issues remained open” with the Troika. That came after Stournaras insisted that Greece has “done a lot” and was “looking forward to the completion of the review.”
Also holding up an agreement is whether Greece will lift a ban on foreclosures as the Troika has demanded. Stournaras is in favor of letting banks seize the homes of people who can’t pay because of big tax hikes, slashed pensions and pay cuts.
Greece also wants to unilaterally extend a cut in the Valued Added Tax (VAT) from 23 to 13 percent for restaurants which is due to expire this month. The reduction was made in the summer to help the tourist season but the Troika believes it’s costing too much in lost taxes.