Push on talks amid fears creditors will seek more austerity

18 November 2016
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Government officials and envoys representing the country’s creditors are entering the final phase of negotiations as part of a second bailout review amid fears in Athens of demands for harsher measures.

Officials are to have back-to-back talks over the weekend in a bid to reach a consensus on several thorny issues, notably regarding changes to labor laws that creditors are pushing for in a bid to make the Greek economy more competitive.

Foreign auditors want to make it easier for struggling employers to carry out mass firings and oppose Greek demands to bring back collective wage bargaining.

A difference of opinion between the International Monetary Fund and Greece’s eurozone partners as regards the country’s fiscal targets for the next few years is also fueling unease.

The European Commission believes Greece can achieve a primary surplus of 3.5 percent of gross domestic product by 2018. The IMF counters that more belt-tightening will be necessary for Athens to hit such a target.

Greek officials are concerned that a consensus between the IMF and eurozone officials on this issue could result in demands for more austerity measures.

Despite the obstacles, however, Greek officials believe that ongoing talks will yield a staff-level agreement by November 28, paving the way for a positive assessment at a meeting of eurozone finance ministers on December 5, where the issue of Greece’s debt burden is to be discussed.

Greece is hoping to elicit a decision on short-term debt relief measures and a road map for medium- and long-term debt restructuring.

In an interview with the Wall Street Journal published on Friday, Finance Minister Euclid Tsakalotos called on Greece’s creditors not to put off decisions on Greek debt, noting that this would in turn postpone investments and delay the country’s economic recovery.

Tsakalotos is expected to present Greece’s draft budget for 2017 in Parliament on Monday ahead of a vote expected to take place by December 10.

The next three weeks will also see the drafting of at least three pieces of bailout legislation: two multi-bills containing prior actions that are currently being discussed and a bill outlining the latest version of a mobility scheme for civil servants.

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