Daily Management Review

Greece Hoping to Finalise Bailout Package by Tuesday


August 20 Due Date for €3.5 billion Repayment to the European Central Bank

Greece Hoping to Finalise Bailout Package by Tuesday
Greece hopes that Tuesday would be the day when it manages to conclude negotiations with its international lenders, according to official Greek sources.  

A €3.5 billion repayment to the European Central Bank (ECB) is impending on Greece by 20 August and the ongoing meetings that began last week with the international lenders is critical to prevent the debt strapped economy from sliding further.

The Greek market is down with almost all the banks doing very badly in the present economic fiasco and the threat of Greece being thrown out of the Euro.

"Efforts are being made to conclude the negotiations, the horizon is by Monday night or early Tuesday," a Greek official said.
Greece parliament is expecting a bill to be placed soon that would comprise of two bills in one. One of the bills would be about the loan agreement or the memorandum of understanding with the lenders while the other would relate to the preconditions and the prior actions that the Greek government would have to take for getting obtaining the loans.
Intense negotiations are on as Greece tries to draw up an agreement of €86 billion from the four institutions representing Greece’s creditors - the European Central Bank (ECB), the International Monetary Fund (IMF), the European Commission and the European Stability Mechanism (ESM). The negotiations between the creditors and the government finance and economy ministers are on from Sunday night to lay out an appropriate plan.
Last week Greece had ruled out any interim arrangement for the bailout package saying that it wanted a complete bailout package or nothing. The proposal for a bridging loan for Greece was given by Germany's finance ministry.

"From 12 midnight (Sunday) the two sides started the final stretch, ‎discussing the final stretch - combing through the final text, sentence by sentence, word by word," a Greek finance ministry official said.

The greatest thorn in the negotiations is the strict austerity measures that the creditors are proposing for Greece in order to approve the loan. Such austerity measure, as reported in the Greek media, include scrapping tax breaks for farmers, tighter regulations on individuals owing back-taxes to the state and a gradual increase in a "prepaid" income tax mechanism. While the farmers receive subsided fuel for agriculture, the increase in ‘prepaid’ taxes would mean that the every tax payer from small business to the self employed would have to pay their taxes in advance in line with anticipated incomes.  

There have however been severe criticisms of the ruling left government from within the ruling part. Sections of the ruling party are opposed to the strict austerity measures that have been proposed by the lenders saying that accepting such preconditions would amount to impinging the sovereignty of the country.

The International Monetary Fund had also indicated that it would want the Greek government to adhere to the austerity measures before approving any bailout package.

However there are questions about how swiftly the loan conditions would be passed by the Greek parliament.

 (Source: www.reuters.com & streetinsider.com)