Greek talks with debt inspectors nearly concluded

AP News
Posted: Oct 10, 2011 12:32 PM
Greek talks with debt inspectors nearly concluded

Greece's talks with its international debt inspectors were essentially concluded Monday afternoon, although some technical details remained and were expected to be wrapped up by Tuesday, the finance minister said.

Debt inspectors from the International Monetary Fund, the European Central Bank and the European Commission have been negotiating with the Greek government for 12 days after suspending their review of Greek reforms in early September amid talk of delayed implementation of reforms and missed targets.

The inspectors, known collectively as the troika, are to recommend whether Greece has done enough to qualify for an euro8 billion ($10.8 billion) installment of its international bailout loans that will prevent it from defaulting on its debts. Athens has said it has enough funds to see it through mid-November.

"After a long series of talks and discussions with representatives of the troika, we have successfully completed the scheduled meetings and the mission will be completed by tomorrow," Finance Minister Evangelos Venizelos said in a parliamentary committee session.

"Some technical issues remain to be worked out," Venizelos said. "If it is necessary for me to handle (the issue) personally in order to give political, final solutions that will be done, but I don't consider that is particularly likely."

Greece has been struggling to emerge from a vicious financial crisis that has left it dependent on rescue loans from other eurozone countries and the IMF since May 2010. The funds are disbursed quarterly after international debt inspectors review the government's reforms and whether it is sticking to the pledges it made to receive the bailout.

Once the troika recommends whether Greece should receive the next batch of bailout loans, the decision must be signed off on by the IMF and the eurozone countries.

But EU leaders, who were to hold a summit next Monday and Tuesday in Brussels, postponed their meeting until Oct. 23 because they need more time to conclude talks on Greek aid, as well as on the recapitalization of banks and bolstering the eurozone bailout fund.

Prime Minister George Papandreou spoke with EU President Herman Van Rompuy by phone on Monday to discuss the Greek financial crisis, the premier's office said. The two will meet in Brussels on Thursday morning, it added later in the day.

By mid-November, Greece will run out of money to pay salaries and pensions.

Greece has been struggling through a third year of a recession, and has been slow to implement several key reforms, including privatizations. The troika suspended its review in early September, returning to Athens only after the government pledged extra austerity measures to ensure it meets its deficit reduction targets. They have included extra property taxes and implementation of a plan to suspend about 30,000 civil servants on partial pay.

The measures have sparked a renewed round of strikes and protests. Public transport workers walked off the job in Athens Monday, snarling traffic across the capital, while municipal workers have also been on strike, leaving garbage uncollected on many streets. Air traffic controllers have been staging work-to-rule protests, leading to long delays for flights from Athens' international airport. A nationwide general strike is set for Oct. 19.

Separately, Greece activated a rescue fund set up under its bailout agreement to restructure Proton Bank, the finance ministry and central bank said, essentially nationalizing the lender.

Proton is one of the country's smaller banks, with assets of about euro3.5 billion ($4.7 billion).

The ministry and Bank of Greece said the bank would be reorganized into a new lender under the name of New Proton Bank, to which all private accounts, government deposits and sound assets will be transferred.

Greece's stability fund received euro10 billion to ensure the stability of banks under the bailout agreed on last year. The Financial Stability Fund will be Proton's sole shareholder.

Still, worries about the banking sector pushed the main Athens stock index down 3.8 percent in the early afternoon, although it rebounded slightly later to close down 0.58 percent at 740.06.