The Minister of Finances Gikas Hardouvelis is expected to provide reassurances at the Eurogroup in Milan that Greece will live up to its commitments stipulated in the bailout deal. Mr. Hardouvelis will also outline the Greek government’s growth plans following the bailout, which will not require a new loan.
Mr. Hardouvelis is likely to argue that a new bailout is not necessary, as the government intends to be able to cover potential deficits by other means, such as issuing further treasury bills. An unnamed EU officer told Bloomberg that the Eurogroup would be open to extending the Greek program or introducing a new one, should the government make the request.
The troika, which is present at all Eurogroup sessions, appears to be concerned and troubled by the delays in Greece, as the coalition government has completed less than 60% of its commitments, with the European Central Bank also predicting a significant budget gap for 2015-2016. The troika has official spoken of a 2-billion-euro gap in 2015, while the coalition government claims that it will exceed its 1.5% GDP primary surplus goal 2014.
Nevertheless, the ECB notes that recent judicial decisions have affected the government’s wage and pension policy, while the tax reforms and situation in healthcare also appear to be a threat to the primary surplus efforts.
IMF denies rumors of debt haircut meeting
The IMF also denied rumors of a meeting to take place in Washington in November in order to discuss the possibility of a new debt haircut. When asked whether a haircut is possible, IMF spokesman William Murray noted that Europe has committed to providing all relief that is necessary so that the Greek debt shrinks to 124% GDP by 2020.
