EU, IMF to press Greece on fiscal plans, privatisations
By Ingrid Melander
ATHENS, April 5 (Reuters) - An inspection team for
Greece's international lenders will this week press the country to deliver on promises to make extra budget savings over the next three years and speed up privatisations.
The EU and International Monetary Fund inspectors starting a three-day visit on Tuesday will scrutinize a draft 2012-2014 budget plan, a key condition of Greece's 110 billion euro ($156 billion) bailout.
Against a backdrop of concerns that fiscal shortfalls and persistent economic weakness might eventually force the country into a debt restructuring, they will also review how plans to target proceeds of 50 billion euros from privatisations are progressing.
Greek officials have said that two thirds of the measures being considered for the 2012-2014 budget plan would focus on spending cuts and one third on revenue increases.
The country must overall achieve savings of about 8 percent of GDP in 2012-2014 to meet targets set by the lenders when they rescued Greece from bankruptcy last year.
"The conditions are tough, the environment is adverse and uncertainties are big," central bank chief George Provopoulos told To Vima newspaper over the weekend.
"But we have a chance to improve the situation as long as we are fast, daring and imaginative in implementing a coherent plan for the use of state property and create attractive opportunities for foreign investors."
Among steps being considered to achieve the necessary savings are an end to some tax exemptions for high income earners, including on interest paid on a first mortgage.
"We will discuss the medium-term plan on the expenditure and revenue side, restructuring in state-owned enterprises and privatisations," said an official close to the troika of European Commission, IMF and European Central Bank officials.
The official said talks were likely to focus on the principles guiding the privatisation exercise rather than discuss figures. "Greece just appointed advisers, we are still in the exploratory phase," the official told Reuters.
TOUGH FISCAL TARGETS
At the end of March,
Greece picked its first advisers on privatisation projects since it agreed in February to target proceeds of 50 billion euros.
Analysts said Greece still had much work to do to convince investors it will meet its targets and manage to go back to bond markets this year or next, especially after recent rating downgrades deeper into junk territory.
"It's going to be really hard for Greece to continue to meet its overall budget deficit targets while being in recession," said Ben May, at Capital Economics. "It may well be its hopes to clamp down on tax evasion prove optimistic."
IMF head Dominique Strauss-Kahn on Monday dismissed a German press report saying the fund was quietly pushing Athens to restructure its debt. "We are supporting the Greek government in its position that it doesn't want a restructuring," he told students in Washington.
The technical visit, in which IMF mission chief Poul Thomsen is expected to take part on Wednesday, is not one of the regular quarterly review missions and will not determine whether Greece will get the next tranche of aid. This will be done during the next regular visit in May, officials said.
Greece has so far received 53 million euros from the EU and the IMF, nearly half of what it will receive overall.
EU and IMF inspectors said during their last visit in February that Athens was broadly on track but warned its fiscal programme could be derailed unless it accelerated reforms and scaled up privatisations.
