by Kerin Hope
Financial Times
April 25, 2017
A German-led consortium is the highest bidder for a two-thirds stake in OLTH, operator of the northern Greek port of Thessaloniki, in a deal valued at €1.1bn, Greece’s privatisation agency HRADF said.
The disposal of Greece’s second-largest port, which is strategically located to serve the Balkan countries and the Black Sea region, was agreed under terms of the country’s current bailout by the European Union and the International Monetary Fund.
Infrastructure sales are a key part of an ambitious privatisation programme but have been delayed by opposition from hard-line members of the left-wing Syriza-led government.
Private-equity firm Deutsche Invest Equity Partners, France’s Terminal Link and Greece’s Belterra Investments, controlled by Russian-Greek businessman Ivan Savvides, offered €231.9m for 67 per cent of OLTH shares. The price represents a 70 per cent premium over the shares’ market value.
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Monday, April 24, 2017
Sunday, April 23, 2017
IMF Warns Greece That Additional Economic Overhauls Are Needed
Wall Street Journal
April 23, 2017
The International Monetary Fund had a sobering message for Greece this weekend: Even if the country secures debt relief from its European creditors—a question that is by no means assured with bailout talks still deadlocked—the nation still needs even more painful economic overhauls than currently planned.
Seven years into an economic crisis and another near-term financial emergency looming, that is a message no Greek wants to hear and a key reason why the IMF is also urging Germany and Athens’ other European creditors to give the country hope in the form of real debt relief.
The country’s “fiscal and structural reforms...pension reforms, tax reforms, are only a down payment,” said Poul Thomsen, IMF’s European department chief and Greece’s original bailout architect, on the sidelines of the fund’s semiannual meeting of finance ministers and central bankers.
To bring the country’s unemployment and income levels back to precrisis rates will take “deep structural reforms, many of which are not yet on the books,” he said. The jobless rate is currently at 22% and half of all the youth labor force are without work.
“This is a long-term project,” he said.
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Greek bankers during financial crisis face bond swaps charges
Financial Times
April 23, 2017
The former governor of Greece’s central bank and the ex-chairman of Piraeus Bank are facing criminal charges over bond swaps worth hundreds of millions of euros in the run-up to the country’s economic crisis.
The case has come to light as the leftwing Syriza-led government intensifies its crackdown on high-level corruption. Many observers view the campaign as an attempt by the ruling party to divert attention from a new round of tax increases and pension cuts agreed with bailout creditors.
A former defence minister already faces a parliamentary investigation over alleged bribe-taking, while procedures are underway to restart a long-delayed court case involving backhanders allegedly paid by Siemens of Germany to Greek suppliers.
The two bankers, George Provopoulos, the central bank chief between 2002 and 2014, and Michalis Sallas, who ran Piraeus for 25 years, face charges of breach of trust. Both men deny any wrongdoing.
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Saturday, April 22, 2017
I.M.F. Torn Over Whether to Bail Out Greece Once Again
New York Times
April 21, 2017
As the International Monetary Fund approaches the seventh anniversary of the contentious Greek bailout, it is torn over whether to commit new loans to a nearly bankrupt Greece.
For more than a year, I.M.F. officials have been saying — loudly — that they cannot participate in a new rescue package for Greece unless Europe agrees to ease Greece’s onerous debt burden.
The fund’s reluctance to commit additional money to Greece also highlights a widely held view among I.M.F. officials — and in the Trump administration — that the fund overextended itself in Greece. They also see the responsibility for restoring the country’s economic health as resting primarily with Europe, which currently holds 80 percent of Greek debt.
At the same time, Greece, which has acceded to demands from the fund to cut spending and bring in more revenue, faces a 7 billion euro debt repayment in July, which it may not be able to meet if the I.M.F. and Europe cannot reach a new bailout agreement.
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Thursday, April 20, 2017
Greece Hits a Bailout Target. The IMF Is Not Convinced
by Sotiris Nikas
Bloomberg
April 20, 2017
Greece achieved a 2016 primary surplus almost seven times higher than its bailout target, but the International Monetary Fund is skeptical the country can sustain that performance.
The Hellenic Statistical Authority is set on Friday to unveil data on last year’s primary surplus, which Eurostat is expected to validate on Monday. The surplus will be close to 4 percent of gross domestic product, according to a finance ministry official who asked not to be identified in line with policy. The bailout target was for a primary surplus of 0.5 percent of GDP.
In spite of its better-than-expected primary surplus last year, the IMF is not convinced Greece will be able to maintain that level of performance for 2018 and beyond. The fund estimates that at least half of the primarily surplus for 2016 came from one-off measures rather than structural changes that will continue delivering results in the years to come, according to a person familiar with its analysis. That has prompted the fund to demand more austerity measures.
Greece’s level of primary surplus is key in determining the kind of debt relief it will need. The more such surplus it has, the less debt relief will be needed. Whether or not Greece should get such relief is a source of contention between the country’s euro-area creditors and the IMF.
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Bloomberg
April 20, 2017
Greece achieved a 2016 primary surplus almost seven times higher than its bailout target, but the International Monetary Fund is skeptical the country can sustain that performance.
The Hellenic Statistical Authority is set on Friday to unveil data on last year’s primary surplus, which Eurostat is expected to validate on Monday. The surplus will be close to 4 percent of gross domestic product, according to a finance ministry official who asked not to be identified in line with policy. The bailout target was for a primary surplus of 0.5 percent of GDP.
In spite of its better-than-expected primary surplus last year, the IMF is not convinced Greece will be able to maintain that level of performance for 2018 and beyond. The fund estimates that at least half of the primarily surplus for 2016 came from one-off measures rather than structural changes that will continue delivering results in the years to come, according to a person familiar with its analysis. That has prompted the fund to demand more austerity measures.
Greece’s level of primary surplus is key in determining the kind of debt relief it will need. The more such surplus it has, the less debt relief will be needed. Whether or not Greece should get such relief is a source of contention between the country’s euro-area creditors and the IMF.
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Wednesday, April 19, 2017
Why the troika and Syriza must remove Greece’s debt roadblocks together
by Miranda Xafa
World Economic Forum
April 19, 2017
On 7 April in Malta, euro-area finance ministers agreed on the key elements of a deal that would unlock further financial assistance to Greece under the current (third) €86 billion bailout. The “in principle” agreement came as a huge relief, as Greece will be unable to meet the €7.4 billion in debt payments due in July without external financing.
But the economic drama continues. Several more steps need to be taken for Greece to avert default.
First, the troika of creditors must return to Athens to finalize the review and present it to Eurogroup ministers by June at the latest. Once it has agreed terms, Greece needs to legislate the agreed measures to ensure that, ignoring outstanding debt, tax income exceeds spending by 3.5% of GDP annually (what is known as a primary surplus) at least until 2020. Prime Minister Alexis Tsipras, leader of the ruling radical left Syriza party, has said he would not submit the measures to a vote in parliament without agreement on debt relief. Creditors, on the other hand, say that debt relief will not be discussed before the measures are voted, and the review is completed.
Once staff-level agreement is reached, the IMF needs to decide whether it will participate in the Greek program with financing. Some euro-area creditors – notably Germany and the Netherlands – have made it clear they will not approve further assistance to Greece without IMF participation. The roadblock? The IMF believes the Greek debt is “highly unsustainable” at 180% of GDP, and has said it would only present a program to its executive board if it receives “satisfactory assurances on a credible strategy to restore debt sustainability”.
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World Economic Forum
April 19, 2017
On 7 April in Malta, euro-area finance ministers agreed on the key elements of a deal that would unlock further financial assistance to Greece under the current (third) €86 billion bailout. The “in principle” agreement came as a huge relief, as Greece will be unable to meet the €7.4 billion in debt payments due in July without external financing.
But the economic drama continues. Several more steps need to be taken for Greece to avert default.
First, the troika of creditors must return to Athens to finalize the review and present it to Eurogroup ministers by June at the latest. Once it has agreed terms, Greece needs to legislate the agreed measures to ensure that, ignoring outstanding debt, tax income exceeds spending by 3.5% of GDP annually (what is known as a primary surplus) at least until 2020. Prime Minister Alexis Tsipras, leader of the ruling radical left Syriza party, has said he would not submit the measures to a vote in parliament without agreement on debt relief. Creditors, on the other hand, say that debt relief will not be discussed before the measures are voted, and the review is completed.
Once staff-level agreement is reached, the IMF needs to decide whether it will participate in the Greek program with financing. Some euro-area creditors – notably Germany and the Netherlands – have made it clear they will not approve further assistance to Greece without IMF participation. The roadblock? The IMF believes the Greek debt is “highly unsustainable” at 180% of GDP, and has said it would only present a program to its executive board if it receives “satisfactory assurances on a credible strategy to restore debt sustainability”.
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Monday, April 17, 2017
After Economic Crisis, Low Birthrates Challenge Southern Europe
New York Times
April 16, 2017
As a longtime fertility doctor, Minas Mastrominas has helped couples in Greece give birth to thousands of bouncing babies. But recently, disturbing trends have escalated at his clinic.
Couples insisting on only one child. Women tearfully renouncing plans to conceive. And a surge in single-child parents asking him to destroy all of their remaining embryos.
“People are saying they can’t afford more than one child, or any at all,” Dr. Mastrominas, a director at Embryogenesis, a large in vitro fertilization center, said as videos of gurgling toddlers played in the waiting room. “After eight years of economic stagnation, they’re giving up on their dreams.”
Like women in the United States and other mature economies, women across Europe have been having fewer children for decades. But demographers are warning of a new hot spot for childlessness on the Mediterranean rim, where Europe’s economic crisis hit hardest.
As couples grapple with a longer-than-expected stretch of low growth, high unemployment, precarious jobs and financial strain, they are increasingly deciding to have just one child — or none.
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Tuesday, April 11, 2017
Surprise! Pro-Washington Declarations in Athens
New York Times
April 11, 2017
Before Donald Trump’s election turned much geopolitical conventional wisdom on its head, if you were in the Greek government, you’d have to be a fool to proclaim, “Only America can help us.”
But someone has, and the fact that it was a member of a coalition led by a radical left-wing party, Syriza — whose members have traditionally opposed United States policy — underlines the contradictions of a government comprising members of the extreme left and extreme right. It shows also how the past seven years of austerity and reforms have reshaped politics and attitudes. And it suggests that anti-Americanism in Greece has faded over the past few years, as the Obama administration supported Athens’s efforts to remain in the common European currency and preached against creditors’ harsh treatment.
Above all, it suggests that in difficult times, old alliances become more precious.
Suspicion and sometimes vilification of the United States by the left has been a standard feature of Greek politics since 1947, when the Truman Doctrine and later the Marshall Plan helped stave off a Communist victory in the civil war that followed World War II and the German occupation. Then, a right-wing military dictatorship from 1967 to 1974 had at least tacit support from Washington. Each year, a march commemorating the student revolt that triggered the end of the junta culminates at the United States Embassy, a constant reminder of a complicated past.
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Monday, April 10, 2017
Greece’s creditors must act to end the gridlock
Financial Times
Editorial
April 9, 2017
As an economic recovery gathers strength in even the more troubled parts of the eurozone’s periphery, the desperate situation in which Greece remains mired becomes ever more apparent. Almost a quarter of the workforce is unemployed. Growth stalled at the end of last year and business owners have been withdrawing their money from banks. The recent deterioration in confidence is in large part due to the pervasive uncertainty over the next stages of the country’s €86bn bailout programme.
The deal reached last week with monitors of the aid programme therefore comes as a huge relief. The agreement centres on income tax and pension reforms that Athens must enact now, in order to unlock further aid. It should pave the way for Greece to receive further financial assistance before July, when debt repayments of more than €6bn are due — a sum that would otherwise cripple the economy.
The measures, which will broaden the tax base and make the cost of pensions more sustainable, are worthwhile in and of themselves in the medium term. If they end the gridlock, the boost to confidence could also more than offset the immediate hit to incomes.
However, if the outlines of an agreement between creditors and debtor are now clear, there remain huge divisions to be bridged between the creditors.
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Editorial
April 9, 2017
As an economic recovery gathers strength in even the more troubled parts of the eurozone’s periphery, the desperate situation in which Greece remains mired becomes ever more apparent. Almost a quarter of the workforce is unemployed. Growth stalled at the end of last year and business owners have been withdrawing their money from banks. The recent deterioration in confidence is in large part due to the pervasive uncertainty over the next stages of the country’s €86bn bailout programme.
The deal reached last week with monitors of the aid programme therefore comes as a huge relief. The agreement centres on income tax and pension reforms that Athens must enact now, in order to unlock further aid. It should pave the way for Greece to receive further financial assistance before July, when debt repayments of more than €6bn are due — a sum that would otherwise cripple the economy.
The measures, which will broaden the tax base and make the cost of pensions more sustainable, are worthwhile in and of themselves in the medium term. If they end the gridlock, the boost to confidence could also more than offset the immediate hit to incomes.
However, if the outlines of an agreement between creditors and debtor are now clear, there remain huge divisions to be bridged between the creditors.
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Friday, April 7, 2017
Greece Rescue Payout Moves Closer With Deal to Quicken Talks
Bloomberg
April 7, 2017
Greece and its international creditors struck an agreement at a meeting of euro-area finance ministers in Malta on Friday, breaking the latest deadlock over the country’s rescue and paving the way for about 7 billion euros ($7.5 billion) in aid for Athens.
The two sides, which have been wrangling over key economic overhauls for months, reached a tentative agreement which allows bailout auditors to return to Athens to finish negotiations on the measures that Greece needs to implement to qualify for the next tranche of emergency loans. Although Friday’s decision represents progress, the euro area won’t unlock the payout until their audit is concluded.
“The big blocks have now been sorted out and that should allow us to speed up and go for the final stretch,” Dutch Finance Minister Jeroen Dijsselbloem, who leads the euro-area meetings, told reporters at the conclusion of the talks. “Further work will continue in the coming days with a view of the mission returning as soon as possible to Athens to complete the work.”
Talks between the government of Prime Minister Alexis Tsipras, euro-area creditors and the International Monetary Fund have been stalled for months as the parties haven’t been able to agree on how to amend Greece’s pensions, labor market and tax system. Greece finally accepted a proposal which was presented earlier this week.
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Thursday, April 6, 2017
The scale of Greece’s economic problems
Financial Times
April 6, 2017
As Greece continues talks with creditors over the next stages of its international bailout programme, Donald Tusk, president of the European Council, has warned that it is “no success story” yet. Further discussions will take place at the meeting of EU finance ministers in Malta on Friday. Greek prime minister Alexis Tsipras has called for an emergency summit of EU leaders if a deal is not struck by the end of the week.
But while Greece tussles over the reforms required to unlock the next tranche of bailout aid, its economy is sliding back towards recession, making the need for funding all the more urgent. The charts below give a measure of Greece’s economic health to date.
Forecasts revised down
In December, Greece looked set for a strong recovery, with the country’s central bank and the International Monetary Fund both forecasting the economy would grow by at least 2.5 per cent in 2017. Their projections were markedly more optimistic than those of a consensus of leading international economists.
But a return to contraction in the fourth quarter of last year along with Athens’ failure to complete the latest bailout process within 2016, as Mr Tsipras had promised, brought a downward revision. The central bank last month cut its growth projection for 2017 to 1.5 per cent.
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Wednesday, April 5, 2017
Greece Said to Near Bailout Compromise on Pensions, Taxes
Bloomberg
April 5, 2017
Greece and its creditors are closing in on a deal over the reforms needed to unlock fresh loans for the country, even as Prime Minister Alexis Tsipras warned that a summit of euro-area leaders may be required if an agreement isn’t reached by Friday.
In a proposed compromise discussed on Tuesday, Greece would reduce its pension outlays by 1 percent of gross domestic product in 2019 and lower its tax-free threshold in 2020 by a similar amount, according to three officials with knowledge of the talks. The tax measures would be accelerated by a year if Greece is set to miss its primary surplus target, which excludes interest payments, in 2018, said the officials, who asked not to be identified since discussions are ongoing.
Finance Minister Euclid Tsakalotos led a Greek delegation to Brussels on Tuesday to try to overcome differences with the nation’s creditors over pension and labor market overhauls. Agreement on the plan, which still needs the approval of the International Monetary Fund and the government in Athens, would clear the way for auditors to return to Greece to conclude negotiations and allow for an aid disbursement before the country has to make more than 7 billion euros ($7.5 billion) in bond payments in July.
One of the officials said the exact breakdown of additional savings envisaged in the proposed compromise was still not fully agreed. Technical issues, including reforms to the energy sector, will also need to be resolved before the review can be completed.
“Had talks and contacts on Greece during the day. Work continues,” Jeroen Dijsselbloem, the Dutch finance minister who presides over meetings with his euro-area counterparts, said in twitter post. A planned conference call between the two sides on Wednesday evening was canceled, one of the officials said.
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Tuesday, April 4, 2017
Greece pursues pension and labour reform deal to unlock more aid
Financial Times
April 4, 2017
Greek ministers and the country’s bailout monitors were on Tuesday trying to strike a deal on the pension and labour market reforms needed to unlock further financial aid.
With the clock ticking down to more than €6bn in debt repayments that Athens must make in July, negotiators say an accord on the main elements of the policy package must be reached soon to stave off the risk of a crisis this summer.
Reaching the deadline without a further tranche of bailout loans would leave Greece’s economy “in such a state that all parameters of decision-making would have to be revisited”, one EU official said. It “would be extremely detrimental”.
A deal on the reform package is one of several requirements for the International Monetary Fund to join the €86bn bailout as a financial partner — a step that Germany says is pivotal if further tranches of aid are to be provided to Greece.
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Does Greece Need More Official Debt Relief? If So, How Much?
by Jeromin Zettelmeyer, Eike Kreplin & Ugo Panizza
Peterson Institute for International Economics
Working Paper 17-6
April 2017
Creditor countries and international organizations continue to disagree whether Greece should receive additional official debt relief, and if so how much. This paper first shows that these disagreements can be attributed to competing assumptions about Greece’s future capacity to repay, particularly about economic growth and the fiscal primary balance. It next evaluates the plausibility of alternative primary balance assumptions using international evidence about fiscal adjustment experiences. It concludes that primary balance paths required to make Greece’s debt sustainable are not plausible and that Greece will therefore require additional debt relief. Finally, the paper shows that the debt relief measures suggested by the Eurogroup in May 2016 (albeit with significant caveats on whether they will in fact be granted or not) could be sufficient to address Greece’s sustainability problem, provided the Eurogroup is prepared to accept both very long maturity extensions on European Financial Stability Facility (EFSF) debt (to 2080 and beyond) and interest deferrals that could lead to a large rise in EFSF exposure to Greece before it begins to decline. If the Eurogroup wishes to avoid the latter, it will become necessary to either (1) extend the scope of the debt restructuring, (2) lower the interest rates charged by the EFSF significantly below current predictions, or (3) extend European Stability Mechanism (ESM) financing beyond 2018 and delay Greece’s return to capital markets for a protracted period.
Working Paper (PDF)
Peterson Institute for International Economics
Working Paper 17-6
April 2017
Creditor countries and international organizations continue to disagree whether Greece should receive additional official debt relief, and if so how much. This paper first shows that these disagreements can be attributed to competing assumptions about Greece’s future capacity to repay, particularly about economic growth and the fiscal primary balance. It next evaluates the plausibility of alternative primary balance assumptions using international evidence about fiscal adjustment experiences. It concludes that primary balance paths required to make Greece’s debt sustainable are not plausible and that Greece will therefore require additional debt relief. Finally, the paper shows that the debt relief measures suggested by the Eurogroup in May 2016 (albeit with significant caveats on whether they will in fact be granted or not) could be sufficient to address Greece’s sustainability problem, provided the Eurogroup is prepared to accept both very long maturity extensions on European Financial Stability Facility (EFSF) debt (to 2080 and beyond) and interest deferrals that could lead to a large rise in EFSF exposure to Greece before it begins to decline. If the Eurogroup wishes to avoid the latter, it will become necessary to either (1) extend the scope of the debt restructuring, (2) lower the interest rates charged by the EFSF significantly below current predictions, or (3) extend European Stability Mechanism (ESM) financing beyond 2018 and delay Greece’s return to capital markets for a protracted period.
Working Paper (PDF)
Greek Pensions Hot Potato Puts Tsipras in Bailout Tight Spot
Bloomberg
April 4, 2017
Athens resident Spiros is among the reasons Greece is having a hard time reaching a bailout accord with creditors.
The 82-year-old is one of about 2.7 million pensioners likely to face a cut in monthly payments for the 12th time since the debt crisis in 2010, as part of the measures required for the disbursement of the next tranche of emergency loans. The government of Alexis Tsipras wants any new cuts in pensions to be phased in gradually and not be put in place from 2019 -- an election year -- as creditors demand. It says it wants to protect pensioners like Spiros, who account for more than a quarter of the country’s 10 million population and are already bracing for higher health insurance costs and a lower income-tax-free threshold.
The government says a brutal cut will further erode the purchasing power of pensioners and worsen an economy that has shrunk by a quarter in the past seven years and left more than 23 percent of the work-age population without jobs. Spiros, who takes home a pension of 1,200 euros ($1,281) a month, is supporting not just himself and his wife, but two adult children, their spouses and a grandchild.
“I am struggling to meet my obligations,” he said, declining to provide his last name because he fears he’ll embarrass his family. “So far I’ve been able to pay all my taxes and bills, but I don’t know if I can keep doing it.”
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