Troika’s new demands are a huge government headache

Author: newsroom  | Published: November 19, 2014

Will an agreement be reached prior to the December 8 Eurogroup conference or will Greece’s program be extended into the next year?

The Greek coalition government is negotiating with the troika of its international creditors from the European Commission (EC), European Central Bank (ECB) and the International Monetary Fund (IMF). There is a deadlock over the final round of measures that need to be enforced before the last tranche of the country’s bailout can be released. The government, however, is resisting pressure for additional budget savings of 2.5 billion euros in 2015.

Troika officials are angry because the Greek government has failed to come up with concrete measures to plug the fiscal gap. A teleconference between Greece’s General Accounting Office and the troika’s technical teams on Tuesday led to a reduction to the budget savings that need to be met, however the two sides are still gridlocked over the content of the 2015 budget to be submitted to Parliament even though sources from the Finance Ministry say “the discussion was positive and will continue.”

The troika has requested the reduction in the regulation for 100 installments. The government has already come under fire for changing the measure to exclude payment of the joint property tax ENFIA soon after it was implemented last week.

Conservative ND PM A. Samaras and socialist PASOK Deputy PM E. Venizelos

Conservative ND PM A. Samaras and socialist PASOK Deputy PM E. Venizelos

The government is arguing that similar preductions for a fiscal gap had been made in previous years and that the troika had always overestimated the country’s fiscal gap. It is asking for the calculations to be reviewed. On its part, the troika believes that extra caution needs to be exercised due to the political uncertainty in Greece.

Finance Minister Gikas Hardouvelis said that there needs to be a “calm approach” following his meeting with President Karolos Papoulias on Tuesday. “For the sake of the country, we must reach a secure agreement with the creditors in good time, and we will make it,” he said.

There is concern about whether the government will meet its goal of completing the troika review by the December 8 Eurogroup meeting, leaving open the possibility of an extension of the program into next year.