Troika returns to Athens for a new, maybe last, audit
Photo © vieraugen - Fotolia
(ATHENS) - Greece has prepared the ground so that Tuesday's visit by the troika of its international creditors could be the last review of its finances ahead of an early bailout exit.
Greece's massive debt crisis nearly broke apart the eurozone. But after four years and a bailout worth up to 240 billion euros ($300 billion), Athens has largely repaired its finances and is eager to get free from the EU and IMF's tight budgetary and policy leash.
Talk of a new EU bailout when the current one expires in December has faded and instead officials now say it may end its IMF programme early.
"Greece won't be needing a new bailout programme," Greek Prime Minister Antonis Samaras said at the weekend.
"We can cope in the coming year, even without the remaining financial aid of the existing bailout programme," he added.
Greece is slated to receive another 1.8 billion euros from the EU by December.
Samaras also raised the possibility last week that Greece could drop its IMF programme early, which lasts until 2016 and under which 12.6 billion euros remains to be disbursed.
"I believe this cooperation will be completed ahead of schedule. We will see what happens with the next bailout tranches," Samaras said last week during a meeting with German Chancellor Angela Merkel in Berlin.
That has set the stage for tense talks with the auditors from the European Union, IMF and European Central Bank, which previously insisted Greece undertake stiff budget and benefits cuts as well as reforms to improve economic performance.
Athens is expected to try to buy time concerning the implementation of crucial labour and insurance sectors reforms, scale down the 2015 budget surplus target and include tax breaks in the draft 2015 budget.
But EU sources cited by Greek media indicated the troika will insist Athens stick to the agreed target of a 3 percent budget surplus before debt payments and that it close a fiscal gap estimated at around 2 billion euros for next year.
- Political not economic motives -
Many analysts believe that government's motivations are more political than economic.
"It's a political question," said German economics Jens Bastian. "The Greek government wants to return back to normal and would like to join the same club as Portugal and Ireland," which have both now exited their bailout programmes.
Exiting the bailout could have tangible political benefits for Samaras' centre-right, socialist coalition government.
The strict bailout conditions have led to the anti-austerity Syriza party taking the lead in opinion polls, outpacing the coalition parties together.
Analysts believe exiting the bailout would help Samaras gain the extra votes the coalition needs to ensure the election of a president next year, without which an early vote would be triggered.
But a political decision to exit the bailout early "isn't necessarily economically wise," said Napoleon Maravegias, an economics professor at the University of Athens.
He expressed doubts that Greece will be able to borrow on the markets at rates as low as those offered by the IMF.
"Why pay so dearly to finance oneself? To become a normal country? But Greece will never be a normal country for the markets," said Napoleon Maravegias.
Greece's debt level is still nearly 175 percent of gross domestic product, despite a controversial write down of privately-held debt.
Despite the improvement in its finances, the Greek economy is still not growing and more than one in four people is jobless. The first quarter of growth is expected at the end of this year after 6 years of recession.
An analysis by Eurobank judged it feasible that Greece could rely on the markets to finance itself until 2022, but then the situation will become more complicated as Athens will begin paying back its bailout loans.