Wednesday, November 22, 2017

Greece’s creditors back in Athens as bailout talks resume

By on February 28, 2017

A pedestrian passes graffiti on a wall in Athens, Tuesday, Feb. 28, 2017. Last week, Greece agreed to legislate new reforms to come into effect in 2019, but said these will be fiscally neutral: for every euro's worth of new burdens on the Greek taxpayer, an equal amount of relief will be granted. (AP Photo/Thanassis Stavrakis)

A pedestrian passes graffiti on a wall in Athens, Tuesday, Feb. 28, 2017. Last week, Greece agreed to legislate new reforms to come into effect in 2019, but said these will be fiscally neutral: for every euro’s worth of new burdens on the Greek taxpayer, an equal amount of relief will be granted. (AP Photo/Thanassis Stavrakis)

ATHENS, Greece – Greece resumed long-delayed bailout talks with its creditors Tuesday as figures showed bank deposits in the cash-strapped country running at a 15-year low.

Representatives from Greece’s bailout inspectors in Europe and the International Monetary Fund have resumed talks with the Greek government on further reforms following a months-long delay caused by disagreements over the appropriate austerity mix.

Enacting the reforms to such things as pensions and the labor market will unlock more bailout cash for Greece – meaning it will have enough money to pay off debts due in July and avoid a potential exit from the euro, or Grexit.

Finance Minister Euclid Tsakalotos said he expects the talks to last “a week or ten days” and that the aim is to achieve a “preliminary” agreement by the next scheduled meeting of eurozone finance ministers on March 20.

“So we are now at the point where we wanted to be – not from the point of view of timing but as a procedure,” he said.

“We are now in a procedure where everything will be agreed as a package,” including fiscal measures, budget targets after the current bailout expires in mid-2018 and debt relief, all which will be submitted to Greece’s parliament for approval.

Greek government officials have insisted that any new pain that will emerge from the discussions will be fully offset. No specific details have been provided.

Greece is under renewed pressure to resolve disagreements with lenders ahead of a mid-summer spike in its debt repayment schedule that it would be unable to cover without the resumption of bailout loan payouts. Greece owes around 7 billion euros in July ($7.6 billion) alone.

The government’s timeline for an agreement that would allow Greece to join the European Central Bank’s bond-buying program and tap markets later this year has already been derailed, prompting renewed speculation that the country could face another default and even Grexit in the summer – or be eventually forced to seek yet another bailout.

The uncertainty has pushed Greek bond yields higher, a sign of diminishing market confidence, while domestic deposits fell to a new 15-year low in January, according to the Bank of Greece, after a 1.5 billion-euro outflow – despite strict controls in withdrawals enforced in 2015.

As talks between the Greek government and its creditors resumed, Prime Minister Alexis Tsipras heaped blame on domestic banks for the country’s long-lasting financial crisis.

He told leading Greek bankers that “the crisis started from banks’ inability to provide liquidity (to the economy) and will finish with the end of this inability.”

Most economists attribute the seven-year crisis to years of profligate government spending, which, combined with under-reporting of key budget figures destroyed investor confidence and left Greece unable to borrow from money markets. The economic meltdown subsequently hit Greek lenders, which required large capital injections.

The country has been forced to borrow billions from its European partners and the International Monetary Fund, on condition that it implemented savage spending and income cuts, and broad market reforms.

Tsipras, who agreed Greece’s third international bailout in July 2015, has a three-seat majority in parliament, which leaves him vulnerable to defections. Lawmakers from his left-wing Syriza party have already been forced to back pension cuts and tax hikes that directly contravened Syriza’s electoral platform, amid growing popular resentment.

The government’s popularity has fallen drastically after two years in power, and polls now give Syriza about half the support the main opposition conservatives enjoy, at around 15 percent.

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