http://www.telegraph.co.uk/finance/financialcrisis/10167268/Greek-gets-4.8bn-in-staggered-bailout-payments.html
Last night's meeting of eurozone finance ministers agreed to pay the scheduled third quarter bailout instalment of €4.8bn (£4.1bn) but broke it down into three "disbursements" linked to reforms.
The first payment of €2.5bn from the eurozone will be paid after July 19 on condition that of "full implementation of the prior actions", including legislation that is passing through the Greek parliament over the next week.
"Significant further work is needed over the next weeks to fully implement all prior actions required for the next disbursement," said a eurozone statement.
"Especially, the required reforms of the public administration will need to be carried out so as to increase the efficiency of the public sector while it is being steadily downsized, and further efforts are needed to improve tax revenue collection."
The second instalment will be €1.8bn from the IMF in August followed by another €500m from the eurozone in October, which will be linked to privatisation targets and administrative reform in Greece.
Greece will also receive, on top of the bailout payments, €2bn on profits from Greek bonds bought by the European Central Bank under its Securities Market Programme (SMP).
"Agreement on Greece was made possible by progress in recent weeks. In many areas, more determined implementation of reforms now needed," said Olli Rehn, the EU monetary affairs commissioner.
Following talks in Athens on Monday morning, the "troika" of the European Commission, European Central Bank and IMF gave a green light to payments but linked the aid to controversial healthcare and public sector staff cuts.
"While important progress continues to be made, policy implementation is behind in some areas," said a troika statement.
"The authorities have committed to take corrective actions to ensure delivery of fiscal targets. These actions include concrete steps to gain control over health sector overspending. The income tax, property tax, and tax procedure codes are being reformed."
Greek plans to meet EU-IMF austerity targets led Antonis Samaras, Greece's prime minister, to close the country's national broadcaster last month triggering a wave of protests that nearly brought down his government.
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Eurogroup to decide on bailout tranche after troika wraps up review, leaves Greece with 'corrective actions' to take
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The troika gave Greece mixed marks on Monday as it completed its review of the country’s adjustment program and highlighted the reforms the government needs to implement in the coming days and weeks.
The statement from the European Commission, European Central Bank and International Monetary Fund came a few hours before eurozone finance ministers were due to meet in Brussels to decide on the release of further bailout loans for Greece.
“This morning we reached an agreement within the troika,” Dutch Finance Minister Jeroen Dijsselbloem said as he arrived for the talks. “We are going to judge their progress. Based on that we may decide on a next tranche” that may be divided into installments if that’s “necessary” and “helpful,” he said.
European governments led by Germany are continuing to keep Greece on life support, unwilling to let it go bankrupt and exit the euro while doling out aid in the smallest possible doses to avoid upsetting their own taxpayers.
Political tumult in Portugal, among the five euro countries tapping emergency aid, raised the pressure on creditors to keep Greece’s program on track. Germany, the biggest creditor, is seeking to avoid a flareup in the crisis as Chancellor Angela Merkel campaigns for re-election in September.
“While important progress continues to be made, policy implementation is behind in some areas,” the troika, comprising the European Commission, International Monetary Fund and European Central Bank, said in a statement on Monday.
The troika highlighted a number of “corrective actions” that the government would have to take. “These actions include concrete steps to gain control over health sector overspending,” the troika’s statement said. “The mission and the authorities agreed that the macroeconomic outlook remains broadly in line with programme projections, with prospects for a gradual return to growth in 2014. The outlook remains uncertain, however.”
“The income tax, property tax, and tax procedure codes are being reformed, and the autonomy and efficiency of revenue administration is being strengthened. The authorities have also committed to take steps to bring public administration reforms back on track, such as by completing staffing plans by end-year, placing staff in the mobility and reallocation scheme, and meeting the agreed targets for mandatory exits.”
The troika said that there had been no agreement with Greece over a reduction of VAT in the food service sector but that discussions over the issue would continue.
Greece’s lenders noted that the government would have to prepare an omnibus bill to implement the reforms agreed. Kathimerini understands that this legislation could be tabled in Parliament as early as Tuesday.
Among the measures agreed with the officials from the European Commission, European Central Bank and International Monetary Fund are a luxury tax that will be implemented from this year in order to help close a 2-billion-euro funding gap for 2013 and 2014.
The two sides have also agreed that the unified property tax will be applied from next year and will be collected by tax offices, not through electricity bills. It is expected to raise up to 2.9 billion euros per year.
There was also an agreement to reduce pensions for retired military personnel and to slash 125 million euros from the defense budget.
The Greek government also agreed to expand the number of people insured by the fund for the self-employed, OAEE, in order to cover a 600-million-euro shortfall in its finances.
The Eurogroup is expected to approve the disbursal of another 6.3 billion euros for Greece on Monday, with another 1.8 billion euros to follow from the IMF.
Of the 6.3 billion euros from the eurozone, Greece is expected to receive 3 billion euros this month and another 1.8 billion in September, when the troika’s milestones have been met.
Finance Ministry sources said this is enough for Greece to meet its financing needs until the end of September.
[Kathimerini & Bloomberg]
Finance Ministry multibill to follow expected Eurogroup approval of next Greek loan tranche
An approval from Monday’s Eurogroup for Greece to receive further bailout funding will trigger a new multi-bill being submitted in Greek Parliament so the “prior actions” agreed with the troika can be adopted.
This legislation is almost certain to be submitted to the House this week, perhaps as early as Tuesday so the latest troika review of the Greek program can be officially included.
Among the measures agreed with the officials from the European Commission, European Central Bank and International Monetary Fund are a luxury tax that will be implemented from this year in order to help close a 2-billion-euro funding gap for 2013 and 2014.
The two sides have also agreed that the unified property tax will be applied from next year and will be collected by tax offices, not through electricity bills. It is expected to raise up to 2.9 billion euros per year.
There was also an agreement to reduce pensions for retired military personnel and to slash 125 million euros from the defense budget.
The Greek government also agreed to expand the number of people insured by the fund for the self-employed, OAEE, in order to cover a 600-million-euro shortfall in its finances.
The Eurogroup is expected to approve the disbursal of another 6.3 billion euros for Greece on Monday, with another 1.8 billion euros to follow from the IMF.
Of the 6.3 billion euros from the eurozone, Greece is expected to receive 3 billion euros this month and another 1.8 billion in September, when the troika’s milestones have been met.
Finance Ministry sources said this is enough for Greece to meet its financing needs until the end of September. |
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