By Marcus
Bensasson & Christos Ziotis - Nov 5, 2013 3:20 PM GMT+0200
Bloomberg
European
Union Economic and Monetary Affairs Commissioner Olli Rehn said he’s confident Greece
can meet its fiscal targets as Prime Minister Antonis Samaras said the country
can’t accept across-the-board wage and pension cuts.
Finance
Minister Yannis Stournaras met today with the troika, comprising
representatives of the European Commission, the European Central Bank and the
International Monetary Fund, who are back in Athens following a five-week hiatus. As he
seeks to convince them that Greece
is complying with its bailout terms, one disagreement involves the extent of
fiscal measures needed to achieve Greek budget-deficit targets.
“Let the
review resume and the Greek authorities now continue and even intensify their
work,” Rehn said in Brussels
today. “I’m sure that we will be able to find a satisfactory solution as
regards to how to ensure the fiscal gaps will be filled and the fiscal targets
will be met.”
Today’s
talks were “good” and focused on structural reforms and banks, a Greek Finance
Ministry official said, speaking on condition of anonymity because the
discussions are ongoing. Talks between the Finance Ministry and the troika will
resume Nov. 8.
EU
Forecasts
The
European Commission today released updated forecasts for Greece , seeing
economic output expand 0.6 percent in 2014 after shrinking 4 percent this year.
The country’s public debt ratio will peak at 176 percent of GDP this year,
while this year’s budget deficit will be around 4 percent of GDP after one-time
factors not included in the troika’s evaluation.
The yield on 10-year Greek government bonds
rose 5 basis points to 8.02 percent at 1:59 p.m. in Athens today. The benchmark Athens Stock Exchange fell 0.8
percent, its third day of decline.
“Markets
are not sure what to make of the latest standoff given the lack of transparency
around the whole process,” Michael Michaelides, a rates strategist at Royal
Bank of Scotland Plc in London ,
said in an interview. “Particularly since Greece has been beating fiscal
targets since its deficit targets were made more realistic in November 2012.”
Debt Relief
Samaras’s
government presented a draft budget last month forecasting a surplus before
interest costs of 344 million euros this year and one of 2.8 billion euros in
2014, or 1.6 percent of GDP. While that would qualify Greece for
additional debt relief under the terms of a year-old agreement with euro
finance ministers, the country disagrees with creditors over the size of cuts
needed to realize next year’s projection.
“I don’t
think there will be a conflict on this,” Samaras said in an interview on MEGA
TV late yesterday. “If something more is needed, we can always find structural
reforms which won’t directly touch pensions and wages.”
Greek
officials say the 2014 fiscal gap is 500 million euros, in a worst-case
scenario. They say it can be met through targeted changes to the social
security system. The newspaper Naftemporiki reported Oct. 29 that the troika
sees the shortfall at 1.2 billion euros.
A further
sticking point includes the fate of two state-owned defense companies, which
the troika wants closed, and progress in meeting targets for firing civil
servants. Disbursement of 1 billion euros of bailout loans agreed to by euro
finance ministers in July is tied to these measures, and Kathimerini newspaper
reported on Oct. 23 the troika may delay the loan, which was due last month,
until the second quarter next year.
To contact
the reporter on this story: Marcus Bensasson in Athens at mbensasson@bloomberg.net
To contact
the editor responsible for this story: Craig Stirling at
cstirling1@bloomberg.net
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