Testing week lies ahead for government

A crucial week lies ahead for the government as it will continue its discussions with the troika, with pressure building for Athens to conclude the latest review of its adjustment program, ahead of the 2014 budget being submitted to Parliament on Thursday and Prime Minister Antonis Samaras meeting German Chancellor Angela Merkel in Berlin on Friday.

Troika officials are due to resume talks with Finance Minister Yannis Stournaras on Sunday with the aim of assessing whether Athens had completed the four “prior actions” needed to secure another 1 billion euros in bailout funding and to agree on a range of measures demanded by the country’s lenders as party of the current review.

With regard to the prior actions, Greece believes that three of the four – settling state debts to the Athens and Thessaloniki water companies, the public sector mobility scheme and the changes to the code for lawyers – have been carried out. The one remaining task is to settle the future of the Hellenic Defense Systems (EAS). Here, the two sides have yet to agree. The troika believes there is no future for the loss-making company and that it has to close. The Greek government wants to convince its lenders to give it 28 months to turn a profit before a final decision is taken.

“If Greece has not at least completed the prior actions for the loan tranche approved in July, then Yannis [Stournaras] will have a tough time,” an experienced Brussels technocrat told Kathimerini.

As for issues being discussed as part of the current review, the two sides are also at odds over the limit on home foreclosures. The troika wants the moratorium on foreclosures for homes worth less than 200,000 euros to end. The government does not want to do this. Then, the two sides also have to agree on the size of next year’s fiscal gap and what measures will be needed in 2014 and 2015. Finally, discussions will also focus on Greece’s privatization program and how to improve it.

The final version of the budget could help Greece’s position in relation to the negotiations on the fiscal gap as it forecasts a primary surplus of 780 million euros for next year, compared to 344 million in the draft version submitted last month.

The working week will end with Samaras’s second visit to Berlin in 15 months. The Greek prime minister is hoping that his discussion with Merkel will have positive implications for Greece’s plight.