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Disagreements Over Implementation of Reforms Between Greece and Creditors

Negotiations with CreditorsAfter two days of negotiations between the quartet of international creditors’ representatives and Greek governmental officials, there are still many disagreements over the progress of implementation of reforms.
According to a source close to the talks, lenders did not agree with any of the Greek proposals on issues such as bad loans, budget projections, security funds, pensions, public employees’ evaluation, energy, markets and bank recapitalization.
Friday is the last day of the review and before the quartet depart from Athens they will leave a list of prior actions that must be completed by November 10, after which they will return for the first review of the implementation of the bailout program. A positive review in November will give the green light for the disbursement of the 2-billion-euro sub-tranche of the bailout loan.
Issues that remain open are:

  • Non-performing loans: Lenders ask for foreclosure and auction of homes worth 120,000 euros or more, while the Greek government had proposed the limit to be 350,000 euros. Still, this applies to only a small number of debtors, while other bad loans have not been discussed at all.
  • The budget for 2016: The Greek government hopes that at the end of the year the state deficit would be less than estimated, therefore less measures will be needed for the 2016 budget.
  • Security funds and pensions: Despite cuts in pension, Athens seems to proceed with more cuts, even in lower pensions. So far, creditors are not convinced that security funds are viable with the present measures.
  • Evaluation of public sector employees: The issue has not been touched yet and has to be completed by mid-November. Public sector employees must be evaluated by then and the single payroll should be put into effect. Also, the mobility scheme of public employees should start being implemented in December.
  • Bank recapitalization: The bill for bank recapitalization must be voted by next week. The results of bank tests will be ready next week and will show what the capital needs are. Banks must recapitalize by mid-December.
  • Markets-energy: Creditors have listened to the Greek proposals and did not approve or reject any of them. They will approve or disapprove the proposals during the first official review of the bailout program implementation in November.

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