A teleconference between troika and Greek government officials on Tuesday led to the lenders’ estimate for next year’s fiscal gap being reduced but not to the point where the two sides are in full agreement over the content of the 2015 budget, which is due to be submitted to Parliament this week.
Sources said that members of the troika’s technical team saw the shortfall being roughly halved from their estimate of 3.6 billion euros after the Greek side presented some cost-cutting measures that included changes at public organizations.
However, the budget is due to be tabled in Parliament and its seems unlikely that an agreement on the full amount the troika has in mind will be reached. Following a meeting with Prime Minister Antonis Samaras on Tuesday, Deputy Premier Evangelos Venizelos pointed out that Greece’s lenders have overestimated the country’s fiscal gap in the past.
There is also much ground for the government to cover in terms of agreeing with the troika on a range of other outstanding actions. However, the two coalition leaders agreed on Tuesday that they would not budge on some of the troika’s demands, such as further pension reform and more changes to the law on tax arrears passed last month.
As a result, there is now concern within the government that the target of completing the troika review by December 8 will be missed, leaving the possibility of a technical extension to the program into next year.
Despite fears of a deadlock in the talks, Finance Minister Gikas Hardouvelis said he was set on reaching a timely agreement with the troika, adding that he would not be swayed by “chest-beating” or populism. “Today we need a calm approach,” Hardouvelis told reporters after talks with President Karolos Papoulias during which he conceded that talks with the troika were tense, with “nerves stretched” on both sides. “For the sake of the country, we must reach a secure agreement with the creditors in good time, and we will make it,” he said. His comments were seen as being directed both at the coalition, which has been riven by infighting over reforms, and at the opposition, which has resisted calls for any kind of consensus and is pushing for early elections. The minister also made waves by suggesting that the risk of a potential eurozone exit for Greece has not completely disappeared. “We will keep Greece in the European family,” he said.