Troika of Greek Creditors to Travel to Athens for Debt Talks
Less than seven months after Greece's three major creditors were declared unwelcome in Athens, representatives of the troika prepared to travel there to start on-the-ground talks in the coming days about a new multibillion-euro bailout.
In a stinging concession by Prime Minister Alexis Tsipras of Greece, who had vowed to bar them, negotiators from the European Commission,the European Central Bank and the International Monetary Fund are to arrive in the capital just days after the Greek Parliament passed new economic measures needed to start talks on a financial aid package up to 86 billion euros, or about $94 billion, the third in five years.
The preparations got underway as a leading private economic research institute, the Foundation for Economic and Industrial Research, known by its Greek acronym, IOBE, said that a damaging recession had once again gripped the country and would most likely persist through next year. The Athens-based institute estimated on Friday that the economy would contract 2 to 2.5 percent this year, after growing 0.7 percent last year. Unemployment, which recently rose above 26 percent after falling slightly last year, will continue to mount, the institute predicted.
Continue reading the main story Timeline: Greek Debt CrisisThe bleak outlook, which the institute said was exacerbated by capital controls recently placed on Greek banks, raised questions about whether a raft of austerity terms that the creditors are demanding in exchange for the new bailout would further weigh on the prospect of a recovery.
The creditors' representatives had been expected to arrive on Friday, but "procedural issues and logistics" — including the need to find a suitable, secure site in Athens for them — delayed their arrival, a Greek government official said.
The official also said that by the end of Friday, Greece would send an official request to the I.M.F. see king its involvement in the bailout program, as the fund had demanded.
Detailed talks on a new bailout for Athens began earlier in the week by telephone, with the aim of concluding negotiations during the second half of August, Pierre Moscovici, the European commissioner for economic affairs, said on Wednesday.
Continue reading the main story Video Greece's EntrepreneursGreece's economic crisis has taken its toll on businesses in the country, but some entrepreneurs are fighting to build their companies in the midst of it all.
Watch in Times Video »"We expect the institutions to go to Athens in the coming days," a spokeswoman for the European Commission said in a short statement on Friday.
After a monthslong delay in securing a deal and a dramatic face-off between Mr. Tsipras and European leaders that nearly saw Greece crash out of the euro, Greece is more in need of financial aid than ever.
The Greek government said on Thursday that its Treasury would be far shorter on cash this year than previously imagined. Athens said it would not be able to meet a 1 percent target for the amount of cash on hand after expenses and interest payments. In earli er bailout talks, Mr. Tsipras had pushed for the target for that primary surplus to be lowered from around 3 percent, because it would allow Athens to set aside more money to stimulate the moribund economy rather than diverting more funds to debt payments. But with the economy having slumped into a new recession, there is apparently not enough money to meet even the 1 percent goal.
On Thursday, the government said tax revenues for the first six months of the year fell short of expectations by €2.3 billion.
Continue reading the main story Graphic Which Was Bigger: The Greek or American Bailout?A comparison of the Greek and American bailouts and their economic impact.
The continued money troubles highlighted the stark challenge facing Mr. Tsipras and Greece's creditors, less than a week after European officials, including the European Commission president, Jean-Claude Juncker, and the German finance minister, Wolfgang Schäuble, said that Greece might need to exit the eurozone, even if temporarily.
The Greek government hopes to conclude negotiations with creditors over the new bailout by Aug. 18, two days before Greece must make a crucial €3.2 billion repayment to the European Central Bank. On Thursday, creditors discussed extending a bridge loan to Greece closer to that date, if negotiations on the larger package appeared to founder.
Greece needs the aid package because it is effectively out of money. For months, it has been siphoning funds from municipalities and state entities to pay its international debts. To keep the Greek government from defaulting to its biggest lenders, European Union finance ministers agreed on July 16 to lend it€7 billion.Athens then used the money to pay back loans from the International Monetary Fund and the European Central Bank.
While talks for a financial rescue package are getting underway in Athens, that does not mean the danger of a Greek departure from the euro currency union is off the table. Moody's,the credit ratings organization, said recently that "risks remain elevated" if the bailout talks go off track.
"Judging by recent events and the deep economic problems and social divisions within society," Moody's said in a note, "it is highly uncertain whether the Greek authorities have the capacity to achieve agreed objectives and to abide by its creditors' conditions."
On Thursday, Mr. Juncker, who less than a month ago sought to paint himself as a champion of Greece's staying in the eurozone, detailed the conditions for Greece to comply. A Greek exit from the eurozone would be "off the table" if Greece delivered on its promises to overhaul the economy, he told the Austrian radio station ORF.
Source: Troika of Greek Creditors to Travel to Athens for Debt Talks
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