Saturday, 1 February 2014

Top Officials Held Private Meeting on Greece Bailout. Athens Struggles to Meet Some Bailout Conditions.



By MATINA STEVIS CONNECT

Updated Jan. 31, 2014 3:40 p.m. ET

BRUSSELS —Top officials peeled away from colleagues after a gathering of euro-zone finance ministers in Brussels on Monday evening for a private meeting to discuss mounting concerns over Greece’s bailout.
Greek Finance Minister Yiannis Stournaras, who was briefing the press in a building across the street at the time, wasn’t invited.
High-level officials from the International Monetary Fund, the European Commission, and the European Central Bank, as well as senior euro-zone officials and the German and French finance ministers were present.
The meeting reflects anxiety that Greece could yet disturb the relative calm in euro-zone financial markets. But the issue is unlikely to come to a head until May when Greece needs to repay some €11 billion ($14.85 billion) of maturing government bonds.
The private meeting, confirmed by several people with direct knowledge of the talks, comes as Athens struggles to meet some of the conditions set by its official creditors for further payouts from bailout funds.
The Greek government has been praised by its peers for reining in spending and implementing some reforms. Economic data suggest the country is on the brink of a slow recovery after six years of recession.
The Monday meeting was held to discuss how to press Athens to forge ahead with unpopular reforms to its labor and product markets, and how to scramble together extra cash to cover a shortfall in the country’s financing for the second half of the year that is estimated at €5 billion to €6 billion.
The meeting was inconclusive, people familiar with the situation said. Talks with the Greek authorities continue, though representatives of the three institutions known as the troika have put on hold their plans to travel to Athens. A spokeswoman for the IMF said that she expected the troika mission to return to Athens soon.
Concerns are growing because €11 billion of Greek government bonds mature in May. The IMF hasn’t disbursed any aid to Greece since July and is €3.8 billion behind in scheduled aid payments. The IMF insists on having a clear view of the country’s finances 12 months ahead, and this condition hasn’t been met.
European officials said the IMF would accept an explicit promise from the euro area to cover this gap somehow, and wouldn’t demand money on the table. The IMF didn’t comment.
The political situation in Greece is fragile. Conservative Prime Minister Antonis Samaras, locked in a weak coalition government with a mere three-seat majority in Parliament, is falling behind in the polls. Leftist opposition party, Syriza, looks set to win local and European Parliament elections in May.
The victory could destabilize the government and lead to snap elections, although Mr. Samaras has vowed he doesn’t want that.
Creditors, and in particular Germany, prefer to give Mr. Samaras some leeway, people familiar with the situation say.
“Although many reforms remain outstanding, the Germans recognize Samaras is their best hope. The conversation in Greece will get much more difficult with a Syriza-led government,” said Mujtaba Rahman, head of Europe at Eurasia Group.

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