Greece, Troika Optimistic on Reaching Deal Before Meeting

By Paul Tugwell & Tom Stoukas - Jul 8, 2013 1:01 AM GMT+0300

Greek Finance Minister Yannis Stournaras said the government probably will reach a deal with international creditors before today’s Eurogroup meeting to keep bailout funds flowing to the country.

“I’m optimistic that we will close a deal,” Stournaras said yesterday in Athens after a seventh day of talks with representatives of the so-called troika of the International Monetary Fund, European Central Bank and European Commission.

Approval of an agreement at the meeting of euro-area finance ministers in Brussels would allow Greece, which has been unable to tap bond markets since 2010, to secure payment of 8.1 billion euros ($10.4 billion). The loan, part of pledges of 240 billion euros in support from the euro area and IMF, hinges on Prime Minister Antonis Samaras meeting demands for reforms, including cuts to the government’s payroll.

Both sides have agreed on the procedure for job cuts in the public sector and for covering a budget gap for 2013 and 2014, according to finance ministry officials who asked not to be identified because the talks are confidential. Discussion will continue on a possible reduction of the sales tax for restaurants to 13 percent from 23 percent, the officials said. A law bundling the latest measures will be submitted to Parliament by tomorrow, they said.

“We have made very good progress,” Poul Thomsen, the lead IMF negotiator on the Greek program, told reporters yesterday. “Hopefully, we will conclude an agreement” before today’s Eurogroup meeting.

Troika Statement

Greece and troika officials will conclude discussions today at the Eurogroup Working Group that will prepare the final document for presentation to the finance ministers for approval, Stournaras said. A statement from the troika will be released before European markets open, he said.

Euro-area finance ministers meet in Brussels beginning at 3 p.m. local time.

The discussions between Greece and its international lenders have “a reasonable chance” of resulting in an agreement that will be presented to euro-area finance ministers, EU Economic and Monetary Affairs Commissioner Olli Rehn said yesterday.

“That really depends on Greece and whether it is able to ensure that all the milestones will be met,” Rehn said in an interview in Aix-en-Provence, France, where he was attending a conference.

Samaras said in a speech to party supporters yesterday that his New Democracy party was united in a common purpose with coalition partner Pasok to bring the country out of its economic crisis. Samaras last month replaced ministers in his cabinet and gave Pasok a greater role after junior partner Democratic Left withdrew its support.

State Assets

Democratic Left quit the government after Samaras shut down national broadcaster ERT without consultation, firing 2,600 employees, a day after the country failed to draw any bids in its sale of the national gas company Depa SA. That failure punched a hole in plans to reduce debt through the sale of state assets.

The troika agreed during the talks to reduce the target for revenue from state asset sales to 1.6 billion euros this year, state-run Athens News Agency reported, citing an unidentified official from Hellenic Republic Asset Development Fund. The government will need to raise another 1 billion Euros next year, with the gas company set to be sold in the first half, ANA said.

The talks between the troika and the Greek government come as Portuguese Prime Minister Pedro Passos Coelho struck a deal with Paulo Portas, leader of the conservative CDS party, to keep his coalition government together and avoid early elections. Portas will become vice premier and will be responsible for coordinating economic policy and the relationship with troika officials responsible for the country’s bailout program.

“Portugal will continue to have a stable and determined government to solve the country’s serious problems,” Coelho said in Lisbon July 6. “We want to complete the aid program by the dates that have been set. We want to create the conditions for a new economic cycle.”

To contact the reporters on this story: Paul Tugwell in Athens at ptugwell1@bloomberg.net; Tom Stoukas in Athens at astoukas@bloomberg.net

To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Jerrold Colten at jcolten@bloomberg.net