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FACTDROP: Why was Greece’s last €71.5bn delayed…again?


Why was Greece’s last €71.5bn delayed…again?

IMF's Lagarde, Eurogroup's Juncker and German finance minister Schauble at Thursday's meeting

Πηγή: FT
By Peter Spiegel
March 5 2012

The Greece crisis is entering a crucial week, with private investors deciding whether to participate in a €206bn debt restructuring and Greek officials scrambling to finalise reform measures to release the last €71.5bn in bail-out money in time for a eurozone finance ministers meeting Friday.

The failure of the ministers to sign off on all the aid during a meeting in Brussels on Thursday caught a few people by surprise. Over the weekend, Brussels Blog got its hands on the report by the troika – the European Union and International Monetary Fund team that monitors Greek compliance – showing where Athens came up short.

As we reported last week, the troika evaluation (a copy of which can be found here) held that Greece had completed most of the 38 “prior actions” ahead of Thursday evening, but had not yet fully implemented all of them, particularly in the area of so-called “growth-enhancing structural measures” – mostly a series of changes in wage and collective bargaining laws aimed at driving down costs.

The troika analysis lists these iteams as “mostly done”, and a last minute dispute included in the section – where the Greek government changed the way unemployment benefits were calculated – was switched back at last Thursday’s meeting, according to a senior eurozone official.

Most of the other things that must be completed by Friday fall under the category of “fiscal consolidation”, euro-speak for spending cuts. Here, the prime holdup is implementing legislation, particularly at the local level, for about €240m in cuts to local government grants and spending.

Lastly, more work needs to be done on figuring out what to do with struggling state-controlled ATEbank, the politically-connected Greek financial institution which is sitting on a pile of unrecognised bad loans and is in need of restructuring. A final report on the bank’s disposition is “expected shortly”.

For those following Athens’ progress closely, the original list of the 38 items that needed to be completed and given to Athens two weeks ago can be viewed here.

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