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Update:Greece Says Troika Talks Over;Timing Of Report Unclear
By Market News International || June 3, 2011 at 15:05 GMT
–Adds Background On Political Dissent, New Bailout Talks
ATHENS (MNI) – The Greek Finance Ministry announced Friday
afternoon that the government has concluded its talks with technical
experts from the European Commission, the IMF, and the ECB, but it
remained unclear whether the report of the so-called “troika” would be
issued later today, over the weekend, or even next week.
The ministry said the talks, which lasted an unexpectedly long
three weeks and took place against the backdrop of rising financial and
social tension, had concluded “positively.” It gave no other details
other than to characterize the topics covered in general terms.
The talks were a regularly scheduled quarterly review of progress
achieved by Greece in implementing the economic and fiscal conditions
imposed by the ECB, IMF and the Commission as part of a E110 billion
bailout package put in place about thirteen months ago.
The troika and Greek officials also discussed new measures,
including an expedited program of privatization intended to ensure the
government meets its fiscal targets both this year and in the medium
term. The government has pledged to reduce the public budget deficit to
7.5% of GDP this year from 10.5% in 2010 and to 1% by 2015.
The troika’s stay in Athens coincided with parallel negotiations
among national Eurozone politicians and senior officials from the ECB,
the Commission and the IMF over a new aid package for Greece totaling
between E65 billion and E70 billion, on top of the current E110 billion
package.
Though officials are said to be closing in on a deal for a new
program, some key sticking points have slowed the talks and are not yet
fully resolved. They include a heated debate over a demand by Germany
and some other countries to put some of the financial burden for the new
package on private creditors; domestic opposition in Greece to another
planned round of public sector layoffs; and even fiercer resistance to
the privatization program which, at the behest of European and IMF
officials outside Greece, would be managed by a private agency with
heavy input from foreigners.
Greek Prime Minister George Papandreou is currently meeting in
Luxembourg with Eurogroup President Jean-Claude Juncker. There has been
speculation that if their discussion goes well it could clear the way
for release of the troika report — and perhaps even some details of a
new aid package — as early as today. But that is entirely uncertain,
and it is equally unclear how well their discussion will go.
Papandreou and his government are being torn in two directions by
political pressures at home and demands by its foreign negotiating
partners for quick and resolute action to sell off state assets and
shrink the public sector.
The tension has risen sharply in Greece in recent days. Today,
protesters surrounded the Finance Ministry in Athens, blocking people
from entering the building. Finance Minister George Papaconstantinou was
forced to find an office in a building several blocks away in order to
conclude his talks with the troika.
Moreover, government ministers and members of parliament have
received threats in recent days, largely related to the privatization
plans, which are viewed by many as an insult to national pride. The
government spokesman was attacked in Athens Thursday night by angry
pensioners who doused him in yoghurt.
Even the Papandreou’s own Socialist Party is sending him warning
signals. In a letter sent to him Thursday, sixteen members of parliament
from the prime minister’s party threatened to oppose the planned new
measures if the government tried to put them on a fast-track procedure
with one vote for the whole bill, rather than debating the details.
It is believed that Papandreou may cite the growing social and
political unrest in talks with Juncker and other European and IMF
officials in an attempt to try to soften some of the conditions being
imposed — especially the idea of a private privatization agency
dominated by foreigners.
Senior EU sources have told Market News International that of the
new money being envisioned for Greece, about E35 billion would come from
the EU and IMF, with the rest from the privatization effort and from a
program of so-called “voluntary roll-backs,” in which private creditors
would be persuaded to accept a delay on repayment for some period of
time after the bonds they are holding matured.
The idea is that they would accept new bonds for a period of time
that could exceed the maturity on the original bond. The plan, which
would apparently rely on moral suasion, would targets bonds maturing
between 2012 and 2014.
The ECB, which had fiercely opposed any form of haircut or maturity
extension, has softened its stance in recent days, saying it would
accept a voluntary rollover of maturing bonds as long as it could not be
interpreted legally as a “credit event” – ie, default.
However, it is hard to see how banks can be persuaded to accept new
bonds at rates that Greece could afford when market yields on Greek debt
are at such astronomical levels. If the banks pre-commit to such a plan,
it is not clear that their agreement would be enforceable when the time
actually came for them to accept the new bonds.
By Market News International || June 3, 2011 at 15:05 GMT
–Adds Background On Political Dissent, New Bailout Talks
ATHENS (MNI) – The Greek Finance Ministry announced Friday
afternoon that the government has concluded its talks with technical
experts from the European Commission, the IMF, and the ECB, but it
remained unclear whether the report of the so-called “troika” would be
issued later today, over the weekend, or even next week.
The ministry said the talks, which lasted an unexpectedly long
three weeks and took place against the backdrop of rising financial and
social tension, had concluded “positively.” It gave no other details
other than to characterize the topics covered in general terms.
The talks were a regularly scheduled quarterly review of progress
achieved by Greece in implementing the economic and fiscal conditions
imposed by the ECB, IMF and the Commission as part of a E110 billion
bailout package put in place about thirteen months ago.
The troika and Greek officials also discussed new measures,
including an expedited program of privatization intended to ensure the
government meets its fiscal targets both this year and in the medium
term. The government has pledged to reduce the public budget deficit to
7.5% of GDP this year from 10.5% in 2010 and to 1% by 2015.
The troika’s stay in Athens coincided with parallel negotiations
among national Eurozone politicians and senior officials from the ECB,
the Commission and the IMF over a new aid package for Greece totaling
between E65 billion and E70 billion, on top of the current E110 billion
package.
Though officials are said to be closing in on a deal for a new
program, some key sticking points have slowed the talks and are not yet
fully resolved. They include a heated debate over a demand by Germany
and some other countries to put some of the financial burden for the new
package on private creditors; domestic opposition in Greece to another
planned round of public sector layoffs; and even fiercer resistance to
the privatization program which, at the behest of European and IMF
officials outside Greece, would be managed by a private agency with
heavy input from foreigners.
Greek Prime Minister George Papandreou is currently meeting in
Luxembourg with Eurogroup President Jean-Claude Juncker. There has been
speculation that if their discussion goes well it could clear the way
for release of the troika report — and perhaps even some details of a
new aid package — as early as today. But that is entirely uncertain,
and it is equally unclear how well their discussion will go.
Papandreou and his government are being torn in two directions by
political pressures at home and demands by its foreign negotiating
partners for quick and resolute action to sell off state assets and
shrink the public sector.
The tension has risen sharply in Greece in recent days. Today,
protesters surrounded the Finance Ministry in Athens, blocking people
from entering the building. Finance Minister George Papaconstantinou was
forced to find an office in a building several blocks away in order to
conclude his talks with the troika.
Moreover, government ministers and members of parliament have
received threats in recent days, largely related to the privatization
plans, which are viewed by many as an insult to national pride. The
government spokesman was attacked in Athens Thursday night by angry
pensioners who doused him in yoghurt.
Even the Papandreou’s own Socialist Party is sending him warning
signals. In a letter sent to him Thursday, sixteen members of parliament
from the prime minister’s party threatened to oppose the planned new
measures if the government tried to put them on a fast-track procedure
with one vote for the whole bill, rather than debating the details.
It is believed that Papandreou may cite the growing social and
political unrest in talks with Juncker and other European and IMF
officials in an attempt to try to soften some of the conditions being
imposed — especially the idea of a private privatization agency
dominated by foreigners.
Senior EU sources have told Market News International that of the
new money being envisioned for Greece, about E35 billion would come from
the EU and IMF, with the rest from the privatization effort and from a
program of so-called “voluntary roll-backs,” in which private creditors
would be persuaded to accept a delay on repayment for some period of
time after the bonds they are holding matured.
The idea is that they would accept new bonds for a period of time
that could exceed the maturity on the original bond. The plan, which
would apparently rely on moral suasion, would targets bonds maturing
between 2012 and 2014.
The ECB, which had fiercely opposed any form of haircut or maturity
extension, has softened its stance in recent days, saying it would
accept a voluntary rollover of maturing bonds as long as it could not be
interpreted legally as a “credit event” – ie, default.
However, it is hard to see how banks can be persuaded to accept new
bonds at rates that Greece could afford when market yields on Greek debt
are at such astronomical levels. If the banks pre-commit to such a plan,
it is not clear that their agreement would be enforceable when the time
actually came for them to accept the new bonds.
