In World Economy News 16/02/2017
European Union officials urged Greece and its lenders on Thursday to conclude a bailout review quickly to avert fresh uncertainty hovering over the crisis-hit nation and warned that a stalemate could harm its nascent economic recovery.
Inconclusive talks between Greece and its international creditors on economic reforms and debt relief have cast doubt over the future of Greece’s 86 billion euro (£73 billion) bailout programme.
European Commissioner for Economic and Financial Affairs Pierre Moscovici said he was “hopeful” for a political agreement before a meeting of euro zone finance ministers next Monday.
“An agreement on the way forward for the Greek programme is absolutely necessary … with (a) little effort from all stakeholders, (it) seems to me doable,” Moscovici told reporters in Vienna.
Greece could be willing to compromise, he said, if it were given space to accommodate and protect those hit by the crisis.
The Greek government has resisted the imposition of more austerity by the lenders, particularly on groups such as pensioners who have already seen 11 cuts to their income.
“It’s clear that there is a need now to show the Greek people that there is a light at the end of the tunnel of austerity,” Moscovici said.
In Brussels, the European Commission’s vice president responsible for the euro Valdis Dombrovskis said there are costs in delaying agreement on Greece’s bailout review, and a solution needs to be found swiftly.
“There is a common understanding that time lost in reaching an agreement will have a cost for everyone,” Dombrovskis told Greek news portal Euro2day on Thursday.
Dombrovskis, however, said the situation in Greece could not be compared with to the situation in early 2015 when the country narrowly avoided default and toppling out of the euro zone.
Delays in the bailout review mean delays in financial aid. Greece has about 7.5 billion euros of debt falling due by July, which it is unable to pay without more loans from lenders.
So far it has received some 31.7 billion from the latest bailout accord, its third since 2010.
Disagreements over labour and energy market reforms lenders want Greece to adopt have been complicated by broader misgivings from the International Monetary Fund, which will not participate in the most recent bailout because of concerns Athens will never be able to extricate itself from debt.
European policymakers have said that the bailout programme cannot continue without IMF input, although a German politician close to Chancellor Angela Merkel said on Thursday IMF participation is no longer crucial.
The fundamentals of the Greek economy have been strengthened, Dombrovskis said, but that strong growth potential was contingent on reforms being implemented.
“So policy makers are faced with this choice – work hard to reach an agreement that will build on progress made or slip back into uncertainty. I think the choice is obvious,” he said.
Recent Greek economic data has shown how tenuous the recovery is, with inflation rising and economic growth contracting again.
Source: Reuters (Writing By Michele Kambas Editing by Jeremy Gaunt.)
