Greece dances to the tune of the Quartet, tempo set at 1.3% recession

Representatives of four institutions are in Greece to ensure that “milestones” are met to unleash bailout funds for Greece

Greece and its four international lenders – the so-called Quartet – began talks on Wednesday to evaluate the country’s eligibility for an 86-bln-euro bailout deal. Open issues concerning salaries, non-performing roles and VAT were left on the table after 12 harrowing hours of negotiations between Greek government officials and representatives of its creditors from the European Commission, European Central Bank, European Stability Mechanism and the International Monetary Fund.

Team leaders from the four institutions doubt that the government will be able to meet its target of a primary surplus at 0.25% of the GDP for 2015 and 0.5% for 2016.

Finance Minister Euclid Tsakalotos apeared upbeat late on Wednesday night following the end of the meeting. He told reporters he believes that two billion euros of the three-billion-euro tranche may be disbursed by the end of next week. “We are on a good path,” he said. “There is a broad agreement on the fiscal targets. There is agreement on the macroeconomic scenario, that there will be a contraction of about 1.3% this eyar and 1.3% next year.”

In meetings with lawmakers earlier on Wednesday, Tsakalotos underlined that the impact from capital controls was not as serious as the government had feared. Deputy Finance Minister George Chouliarakis said that capital controls may be leifted in the first quarter of 2016 if the economy stabilizes. Rapid growth for Greece is expected to fluctuate between 2.8% and 3.1% between the years 2017 and 2019, said Chouliarakis. He noted that the figures for the Greek economy have already improved, and – as a result – the recession for 2015 will drop to 1.4% from the initially estimated 2.3%. Furthermore, recession for 2016 should be around 1.3% and not 1.5% as was previously estimated.