Greek bailout review to be interrupted for Catholic Easter

20 March 2016
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EU and IMF inspectors assessing Greece’s bailout progress will leave Athens on Sunday and return after Catholic Easter, sources close to the talks said, dashing Greek hopes that the review could be concluded as early as the end of March.

Prime Minister Alexis Tsipras wants to wrap up the bailout review swiftly and start talks on debt relief to restore confidence in the country’s economy and convince Greeks that their sacrifices are paying off after six years of austerity.

But the discussions, which if concluded successfully will also unlock more bailout funds, have dragged on for months due to disagreements over fiscal targets, pension cuts and tax reforms between Athens and its European Union and International Monetary Fund lenders and among the EU and IMF institutions.

The talks, which resumed earlier this month after a break in February, were focused on finding ways to cover an estimated fiscal gap of 3 percent of GDP by 2018, although the IMF initially put the figure at 4.5 percent and Athens at 1 percent.

“The mission chiefs will leave Athens tomorrow evening after a wrap-up of this phase and will return after Catholic Easter,” a government official said on Saturday, adding that technical teams would continue talks in the meantime.

Catholic Easter falls on March 27.

According to sources close to the talks EU lenders have been more lenient during the review than the IMF, which has said that Greece will need far bigger debt relief than euro zone partners have been prepared to envisage. A meeting of euro zone finance ministers in April will be crucial for Greece, which is also dealing with a huge migrant crisis.

The government, which has a parliamentary majority of just three seats, has pledged to trim its pension budget by 1 percent of GDP this year but wants to avoid cutting pensions for a 12th time since 2010 to plug the estimated fiscal hole.

Government officials said that during the latest round of talks the IMF opposed key pension proposals, such as hiking social security contributions, and wants to lower a tax exempt threshold for low-income earners. It has also turned down a plan giving tax evaders incentives to disclose hidden income, as part of efforts to boost tax revenues.

“Such positions… seem to aim at distancing the possibility of concluding the review,” one of the officials said.

The IMF is expected to decide whether to co-finance Greece’s third bailout after the review and in light of how much debt relief Greece receives.

Reuters

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