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Greek leader faces audit amid rescue plan

Katerina Voussoura

Prime Minister Antonis Samaras must face an audit by Greece's creditors and may be tempted to change rescue terms in line with what was offered Spain.

Prime Minister Antonis Samaras must face an audit by Greece's creditors. (AP)

The "troika" of creditor auditors from the European Union, European Central Bank and International Monetary Fund will assess how much progress – if any – Greece has made in implementing structural reforms that are part of the bailout packages that have been keeping its economy alive.

But the visit, expected to begin on Tuesday, though precise information is scarce, comes only days after a critical EU summit, where European leaders gave the green light for troubled banks in Spain to be recapitalised directly from the eurozone's €500-billion bailout fund.

This decision, agreed unexpectedly in the early hours of Friday, takes the burden of rescuing banks off the national budgets of crisis-hit countries and in effect shields government coffers from problems at private lenders.

As such, the deal is of immediate interest to Greece where it has raised hopes that the new government can renegotiate for a similar deal in which battered Greek banks get direct funding from the European Financial Stability Fund or European Stability Mechanism.

Rescuing lenders was a key component of the latest Greek rescue package, which provided Athens with an additional €130-billion in aid, including about €50-billion to shore up private groups like the National Bank of Greece or Alpha Bank.

The banks were hit hard by the bailout package which included a write-off of roughly half the amount Greece owed private investors, especially Greek lenders.

Since that painful restructuring, about €18-billion in rescue funds have landed at the banks, which would likely complicate any change in the terms the funds were originally granted.

Agreed commitments
Despite media reports in Athens that Samaras will make a move to win the conditions offered Madrid by EU partners, the government officially maintained it was steadfastly sticking by its agreed bailout commitments.

"If we are reliable, [EU partners] will show their solidarity ... The government has to move forward by showing its commitment towards carrying out structural changes and reforms," Development Minister Kostis Hadzidakis told state broadcaster NET.

Deputy Finance Minister Christos Staikouras stressed the government was committed to achieving its financial goals and implementing reforms within the agreed economic policy programme.

Adjustments would only be possible, he said, if policies "proved to be financially ineffective and socially unfair", he carefully added in an interview to the Typos tis Kyriakis daily.

Top EU officials meanwhile have firmly fended off calls for a significant revisit of Greece's bailout agreement.

In an interview to Kathimerini newspaper, European Central Bank's executive board member Joerg Asmussen said there should be no illusion that the outcome of the EU summit will in any way reduce Greece's need for reform.

On the eve of his visit to an economics conference here, he urged that Greece get its programme back on track, especially after all the time lost because of two elections in May and June.

'Strict budget'
Eurogroup head Jean-Claude Juncker also pointed out that Greece's case was different to Spain and Italy's.

"The specificity of aspects of the programme that we decided on for Spain and Italy is different from that of Greece, which is a country that has entered a [bailout] programme," he told the state-owned Athens News Agency on Friday.

"I believe that a strict budget must continue to be applied in Greece because Greece must definitely reform its public finances, it must improve its falling competitiveness and [correct the] weaknesses of Greece," he added.

Greece's conservative-led government was formed after elections on June 17, when Greeks returned to the polls for the second time in two months following an inconclusive May 6 ballot that resulted in a political deadlock.

The political stalemate put all reforms on hold, adding more pressure to the new government as money is running out fast and reserves are scheduled to run out late July.

Analysts are torn over how viable this government is, although for the time being fears of the country's immediate euro exit have subsided.

The new government, led by conservative Samaras and backed by socialists and moderate leftists, has had a shaky start plagued by health troubles and resignations.

The premier is recovering from major eye surgery and two of his Cabinet nominees stepped down last week.

Samaras had pledged in his pre-election campaign to renegotiate the terms of the loan agreements, which have included harsh austerity measures and have caused large protests and public outrage. – AFP

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