EU-IMF scrutiny as Greece labours to reform

Greece returns to the EU-IMF operating table this week for a top-to-bottom appraisal that will determine whether its struggling economy will earn another cash injection to stay alive beyond the summer. Auditors from the EU, International Monetary Fund and the European Central Bank -- the so-called troika of Greek creditors -- return to Athens on Tuesday seeking answers from the government on how to bring troubled structural reforms on track. At stake are 11.5 billion euros in spending cuts in 2013-2014 which Greece was originally supposed to identify in June under agreements signed earlier this year, and a privatisation drive that is months behind schedule. The troika's report will determine whether Greece will receive fresh loans of 31.5 billion euros ($38 billion) by September under its debt rescue programme. Without this money, the Greek government will be unable to redeem maturing debt and keep up with salary and pension payments at home. "The two months lying ahead are the most critical," Development Minister Costis Hatzidakis warned on Sunday. "There is no room for delay...the country is in a state of emergency," he told Ethnos daily. "If the current government fails, the next one will be a government of the drachma," he said, referring to Greece's former currency which many analysts warn that the crisis-hit country will eventually be forced to return to. The new conservative-led government led by Antonis Samaras had hoped to extend this fiscal adjustment by at least two years, arguing that greater-than-foreseen recession has wrought havoc on planning and revenue collection. State income is over 1.5 billion euros short of target in the first six months of the year, the finance ministry said last week. "Greece is now going through a crisis unprecedented in times of peace," Samaras told former US president Bill Clinton who briefly visited Athens on Sunday to promote a private Greek-American investment initiative. "We are already in the fifth year of a recession...it is our version of the Great Depression," Samaras said. But fellow EU states and the IMF have told Greece that it is in no position to request a time extension at a time when pledged reforms are months behind schedule, partly because two elections were required to form a workable government in June. German Finance Minister Wolfgang Schaeuble warned Greece in a newspaper interview Monday that it must redouble efforts to comply with bailout conditions imposed by international creditors. "If there were delays, Greece must make up for them," he told the daily Bild. He declined to predict whether Greece would remain in the eurozone and said he would wait for new findings of the troika. Adding further pressure, the ECB on Friday said it would no longer accept Greek sovereign bonds as collateral for bank loans until the end of the troika audit. Faced with this opposition, Greek Finance Minister Yannis Stournaras has avoided all talk of renegotiation at present. "Right now we need to secure an at least tolerable troika report by the end of August," Stournaras told financial daily Imerisia on Saturday. "On this report we can base the request for interim assistance, until we get the loan instalment, and the request for an extension." "At this stage nothing can be taken for granted. Everything is under negotiation and unfortunately, much of what was agreed is not in an implementation phase," the minister said. The government plans to appease its EU-IMF creditors with a redoubled privatisation drive. Prime Minister Samaras is also expected to release on Monday a list of state entities that will be merged to save costs, Greek news reports said. But according to the former head of Greece's privatisation fund Costas Mitropoulos, who resigned last week, asset sales this year are unlikely to exceed 300 million, compared to an annual target of 3.0 billion. Mitropoulos, who has agreed to remain at his post until August 10, acknowledged that the programme was at least three months behind schedule. He said the fund had managed to conclude four privatisations worth 1.8 billion euros ($2.2 billion) in eleven months of operation, compared to an overall five-year target of 28 projects worth 19 billion euros. Mitropoulos' resignation was the third to hit the government in a month, after the junior ministers for labour and shipping had previously bowed out.