Greece has made progress in finding budget cuts needed to continue its bailout programme but not all work is done and international inspectors will return in September for a final verdict, officials said yesterday (5 August).
Inspectors from the International Monetary Fund, the European Commission and the European Central Bank – known as the troika – concluded a visit to Greece on Sunday saying the talks with the new coalition government were productive.
"Talks went well, we made good progress. We will take a break and come back in early September," the IMF's mission chief for Greece Poul Thomsen told reporters after a meeting at the finance ministry.
Warm words from troika, but no decisions yet
Greece has pledged a series of fiscal and reform measures worth €11.5 billion to convince international lenders to keep Athens hooked to a €130 billion lifeline and avoid bankruptcy.
With a €3.2 billion bond maturing in August and Greek officials warning the state will run out of cash within weeks, the troika's review is crucial for Greece's survival.
"The discussions on the implementation of the programme were productive and there was overall agreement on the need to strengthen policy efforts to achieve its objectives," the EU Commission, IMF and the ECB said in a joint statement.
"The Greek authorities are committed to proceeding with determination in their work over the next month," they said.
Athens blames a deeper-than-expected recession for falling behind on its targets and wants to be given more time to catch up. Lenders say slow reforms have not given the programme a chance to work.
In comments to Sunday's Ethnos newspaper, Finance Minister Yannis Stournaras said the measures were needed to bring the programme back on track and will help Athens restore credibility with its European partners.
"A credible programme will allow us to support negotiations on extending its time frame with tangible arguments, which coupled with reforms and privatisations will get the country out of recession," Stournaras told the paper.
Greece must balance cuts against popular resentment
Greek officials have temporarily set aside requests for renegotiation while they hammer out fiscal measures for 2013-14, mostly salary, pension and welfare cuts.
"We have done a lot of work to be able to agree today on a fair amount of the €11.5 billion of measures," said a finance ministry official who requested anonymity. "We will continue to work so that we can send them some measures by the end of the week. We must conclude by early September."
The cuts are expected to meet resistance from a public fed up with years of austerity and suffering from the worst recession in decades, now in its fifth year.
"We will make every effort so that the measures are socially just," a second Greek official said on condition of anonymity.
Prime Minister Antonis Samaras' conservative-led government also announced the revival of a series of structural reforms to give the economy a much-needed boost if Greece is to ever escape the debt crisis that is shaking the single European currency.
The European Commission welcomed the announcements but urged the country to act on its promises.
The structural reforms announced during the troika visit include trying to revive a privatisation programme that has stagnated and proceed with a liberalisation of markets and professions that has been done only on paper.