Troika Inspectors Examine Greek Austerity Measures
The International Monetary Fund and European Union are sending officials to Athens in order to inspect a government austerity plan that must be implemented if Greece is to receive its next tranche of aid. The officials will meet “as soon as possible,” though still in October, in order to discuss the situation in Greece and next disbursement of aid, said one European Commission spokesman.
The “troika” team of inspectors have threatened to withhold Greece’s next 8 billion-euro loan payment if Athens does not move quickly in implementing deficit-reduction measures, which include both deep budget cuts and tax hikes that have been wildly unpopular, setting off strikes and protests around the country.
Depending on the outcome of the troika’s investigations, German Chancellor Angela Merkel has suggested that parts of a second planned bailout, worth 109 billion euros, could be reopened. “We have to wait and see what the troika…finds and what it will tell us [whether] we will have to renegotiate or not,” she told Greek state television NET.
Germany has said that negotiations over the details of the second rescue deal cannot begin until the troika decides whether Greece has qualified to receive the next tranche of aid, its sixth under the first bailout.
The second bailout will impose a 21% loss on private Greek bondholders in order to ease Greece’s debt burden. With economists and policymakers saying that only a 50% loss would make the country’s debt viable, many investors are signing up for the bond exchange plan, helping Greece reach its target of 90% participation in the debt swap program.
In preparation for the troika visit, Greek lawmakers passed a property tax bill on Tuesday — part of an accelerated strategy in which the government will cut the 730,000 public workforce by a fifth, reduce the public wage bill by 20%, and lower overall pensions by 4% in addition to the 10% cut already agreed to in previous plans. The new real estate tax will be extended until 2014, two years longer than originally planned.