report into Greece's finances could be delayed until November, Reuters reports
Officials from the European Union and the International Monetary Fund are being asked to delay a critical report into the state of Greece's public finances until after the US Presidential elections in November, according to a Reuters news agency report.
The report, originally slated for early Summer, had been expected to be published during the first week of October to coincide with the EU Finance Ministers meeting and the Leaders' Summit a week or so later.
However, a senior EU official told Reuters that "the Obama administration doesn't want anything on a macroeconomic scale that is going to rock the global economy before Nov. 6". Reuters also reports that sources in the German government have been nudged by administration officials in Washington to keep the report under wraps until the November polls.
Along with the European Central Bank, the EU and the IMF form what is called the Troika of Greece's international lenders and the final arbiters of terms linked to its €240bn in bailouts negotiated over the past two years. Troika officials have been in Athens since July to assess the efforts of Prime Minister Antonis Samaras and his coalition government partners in agreeing to new spending cuts and austerity measures worth around €11.5bn. Agreement on the proposals is crucial for the cash-strapped nation's Treasury and the release of around €31.5bn in funds from the most recent EU/IMF bailout.
EU spokesperson Simon O'Connor said Friday that Troika analysts would take a one-week break from their work in Athens.
The Financial Times Deutschland reported Friday that senior Greek lenders from the frist bailout may be prepared to take a so-called haircut on around €53bn in loans from the now-defunct Greek Loan Facility. Last year, private Greek government bondholders agreed to swap existing debt for new paper that effectively reduced Greece's debt burden by around €100bn in what many say was the largest bond restructuring in history.
Samaras, has been trying for months to find agreement with his political rivals on the new austerity measures and has been trying to convince lenders to allow Greece an extra two years to implement the stern austerity measures agreed last year by his predecessor, Lucas Papademos, arguing that severe economic slowdown and record unemployment have made delivery of those commitments virtually impossible.
Greece's economy shrank a reported 6.2 percent in the three months ending in June, according to the country's official statistics office, a path that's likely to mean the four-year recession has loped more than 20 percent from total output, making it the most severe contraction in post-war history.
Tax revenues to date have missed the government's target by around €2.8bn as the economy slowed and unemployment surged past 25 percent. The combination has meant that Greece's target of reducing its budget deficit to 7.3 percent this year, from 9.3 percent in 2011, is looking increasingly unlikely, setting up the need for even deeper austerity measures in the coming years.
Greece's state-run thinktank, the Center of Planning and Economic Research, has said the country's promise to cut debt to 120 percent of GDP by 2020 is unachievable, unless the government initiates a series of "targeted policy interventions" which include extensions on the timing of the austerity measures and lower interest rates on loans.
Greece "would die" if it left the single currency, Samaras told a rally in Thessaloniki recently. "Staying in the euro and regaining credibility is the fight we are fighting now. If we left the euro, pensions wouldn't be cut; they simply wouldn't exist. There would be no spending on medicine. Petrol wouldn't be more expensive: it would be rationed."
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