Cyprus Mail
Greece World

EU-IMF postpone visit to Athens in dispute over reforms

By John O’Donnell and Luke Baker

International inspectors from the EU and IMF have called off a planned visit to Greece next week, officials told Reuters on Friday, a move that marks a new low in relations between the parties and could delay aid payments to Athens.

The decision to postpone the visit may be an attempt by the European Central Bank, European Commission and International Monetary Fund – together known as the ‘troika’ – to try to bring Athens to heel as frustration grows over Greece’s failure to complete the reforms it has promised in return for aid.

It is a potential embarrassment for the Greek government, which wants to be able to show it is hitting its targets and bouncing back before it takes over the rotating presidency of the European Union for six months from the start of next year.

The troika visits Athens regularly to check on progress on its bailout commitments and take decisions on whether to release further installments of loans. Brinkmanship over whether Greece is meeting its obligations has been a long-running issue.

The inspectors had been due to assess Greece’s progress ahead of a meeting of euro zone finance ministers on Dec. 9. That meeting is necessary to reach agreement on approving the disbursement of the next tranche of aid.

“It has to be clear that there is a chance of reaching agreement with Athens about reforms before the troika goes over there,” said one official.

He and a second euro zone official said the postponement could delay the approval of the next tranche, although the announcement may also spur Athens into action.

The Greek finance ministry issued a statement saying it was still working with the troika on the timing of the visit.

“The government is in touch with the troika to set the most convenient date for their return so as to complete the prior actions and the current bailout review by the end of the year,” it said.

While it’s possible the differences will be bridged in the coming days, Greece has no immediate funding pressures and can probably delay on reforms for a while longer.

Athens is due to receive up to 5.9 billion euros of loans by the end of the year, according to the latest schedule published by its creditors.

About 1.85 billion euros of Greek bonds mature on Jan. 11, according to Thomson Reuters data. The next big bond maturities, worth about 9.3 billion euros, are in May next year.

The Greek parliament is due to vote its 2014 budget on Dec. 7. Lenders have not given their approval for the plan, which sticks to a target for a primary budget surplus (before interest costs) of about 1.5 percent of GDP next year.

Lenders said this month that unless it found new savings, Athens would miss its surplus target by about 2 billion euros.

But Greek Finance Minister Yannis Stournaras said this week that the difference had narrowed to about 1 billion. The chances are that if that gap can be further reduced in the coming days, the troika will immediately reschedule its visit.

A spokesman for the European Commission said discussions with Athens would continue. “We have not yet taken a decision on precisely when the mission will return,” he said.

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