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Greece – Troika at Odds Over Budget Deficit

Negotiations between Greece and its Troika lenders seem to have reached a deadlock. Greek media report that the meeting was interrupted Thursday night in Athens, and that the EU/IMF/ECD representatives did not complete their review of the Greek economy for the release of the sixth tranche of the €110 billion bailout. The dispute focuses on the Greek budget deficit: the government insists that recession causes the widening of deficit from 7.6% to 8.1% of GDP in 2011, claiming that the hole could be covered without additional measures.

But troika officials estimates the deficit to reach 8.6% of GDP, taking into account deviations in government policy. They requested additional measures of €1.7 billion, estimating that the gap comes from the revenue shortfall of €1.1 billion and deviation of €600 million in expenditure.

According to economic news portal,  sources note that they estimate the deficit to exceed 8.5% (against a target of 7.6%) even if all measures of the memorandum are implemented. According to the troika, the main cause of the deficit is the recession revised around 5% and new government failures. The troika also requests additional expenditure measures as revenue collection does not pay off.

The auditors also require the immediate implementation of interventions regarding privatization, uniform payroll, SOEs shutdowns and mergers, grant reduction, arrears, supplementary pensions, labour relations, profession liberation etc.

Greek Finance Minister Evangelos Venizelos dismissed on Friday Greek media claims that the Thursday negotiations were interrupted in bad mood and that it was the Troika that interrupted the negotiations.

Apparently the differences between Greece and the Troika will be solved through the Eurogroup mediation, possibly next week.

Whether just rumors or reality,  the negotiations interruption – “breakdown” fro some Greek media – showed its impact on Athens Stock Exchange that faces new losses of -3.68% (at 1.58 pm local time) currently at 895.67 units, reaching a level of pre Alpha-Eurobank merger deal. Greek bond spreads and CDS hit new record….

Meanwhile, the chairwoman of the parliamentary budget committee resigned from her post as the Venizelos vehemently disagreed with the committee’s findings that the deficit target is unreachable.

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One comment

  1. About Stella-Savva Balfousia, the chairperson that resigned. Is it true that she “was also a key player in a previous panel of experts that unearthed statistical irregularities and manipulations used to conceal the true state of Greece’s finances under the previous, conservative government.” like Reuters is saying?