Debt inspectors reach agreement with Greece

Monday 15 April 2013 18.13
Next tranche of funds for Greece cleared by Troika
Next tranche of funds for Greece cleared by Troika

Greece today cleared a key hurdle in its drive to receive its next batch of bailout loans.

This comes after international debt inspectors said they had reached an agreement over the country's economic reforms, including the firing of thousands of civil servants.

The review by delegates from the International Monetary Fund, European Commission and European Central Bank, known as the troika, is part of a regular process under which Greece receives installments of its bailout if it meets certain conditions.

Greece has been dependent on the rescue loans since 2010. In total, Greece has been granted €270 billion in bailouts, which it receives gradually.

In return, successive governments pledged to overhaul the Greek economy and have imposed stringent spending cuts and tax hikes. The reforms have been painful. The country is mired in a deep recession, currently in its sixth year, and unemployment has spiraled to around 27%.

In a joint statement, the three institutions said recent steps taken by Greece indicate targets for March "are likely to be met in the near future."

As a result, they said Greece's 16 euro partners could soon agree to disburse €2.8 billion pending from last month.

The euro zone finance ministers and the IMF board are "expected to consider approval of the review in May," they added. "Greece has indeed come a very long way," said the IMF's troika representative Poul Thomsen, speaking during a conference on the economy in central Athens.

"The fiscal adjustment in Greece has been exceptional by any standard,'' he added.

If the country continues implementing the reforms it has pledged, it will be able to achieve its overall budget targets without imposing any further austerity measures, Thomsen said.

The institutions still predict Greece will return to growth gradually in 2014, and say this is being helped by improved wage flexibility helping to restore competitiveness.

The review also covered the dismissal of civil servants, with firings "targeted at disciplinary cases and cases of demonstrated incapacity, absenteeism, and poor performance, or that result from closure or mergers of government entities."

Finance Minister Yannis Stournaras, speaking at the same economy conference in Athens, said "several thousand" underperforming public sector workers would be dismissed, and new, capable employees would replace them.

Reports have indicated that about 4,000 civil servants are to be fired by the end of this year, and 11,000 by the end of 2014. Stournaras said Greece's main target now was to achieve a primary surplus of the budget - a surplus without taking into account interest payments on existing loans - this year.