Sunday, April 21, 2013

UPDATE 1-Troika concludes Greek bailout review, next aid tranche soon -source

By Annika Breidthardt and Renee Maltezou

DUBLIN/ATHENS, April 13 (Reuters) - An inspection team of international lenders has finished its review of Greece's reform progress, paving the way for another 10 billion euros aid payment, a source with knowledge of the talks said on Saturday.

The deal reached on Friday, concludes the first review by the so-called "troika" of the European Commission, the International Monetary Fund and the European Central Bank since they unlocked fresh aid in December, staving off a chaotic bankruptcy.

In exchange for the December deal in Greece's 240-billion euro bailout, Athens passed a fresh round of austerity measures.

"The third review mission of the programme was completed last night in Athens with a staff level agreement," one delegate with knowledge of the discussions told Reuters.

The official added the Eurogroup of euro zone finance ministers and the IMF's board would each likely discuss the agreement in May, a condition for the money to actually be paid.

Klaus Regling, the head of the euro zone's rescue funds, said on Friday the European Financial Stability Facility (EFSF), under which Greece's rescue is handled, stood ready to disburse 10 billion euros ($13 billion) to Athens once conditions were met.

"Greece would get 2.8 billion euros after the milestones have been met. In addition 7.2 billion (euros are) available in bonds to recapitalise the banks. This is based on a tranche already approved last December," he told reporters.

Greece has received about 200 billion euros in rescue loans since its first bailout in May in 2010. But despite imposing a 75-percent debt cut on private-sector bondholders and receiving debt relief from its official lenders last year, it is still far from returning to bond markets.

The recapitalisation of Greece's banks and shrinking the country's spendthrift public sector have been key issues on the agenda of talks with the troika, which resumed its visit in Athens earlier this month.

Prime Minister Antonis Samaras met his coalition partners on Saturday to discuss the hot topics and the progress of the troika review. After the meeting, the deputy finance minister said talks with the troika would be wrapped up by Monday.

"I believe the ultimate details of a deal with the troika will be finalised by Monday night," Christos Staikouras said.

Greece has agreed to dismiss 15,000 public sector workers and hire as many younger employees, Staikouras said. The leader of the Left Coalition party Fotis Kouvelis said the state would reduce its workforce by more than 180,000 workers by 2015.

Under Greece's current bailout plan agreed in November, Athens must overall cut 150,000 public sector jobs from 2010 to 2015, about a fifth of the total, through hiring curbs, retirements and dismissals.

Lay-offs are a sensitive issue in Greece where unemployment has hit a record high of 27.2 percent and the economy is now in its sixth year of recession but recent polls show that most Greeks want the reform of the public sector and its services.

With the country's constitution protecting state workers from dismissal, Samaras said in an interview with a newspaper on Saturday that the government could reduce staff by scrapping job positions.

There is no doubt we need a smaller but also better public sector," Samaras said. "The constitution doesn't ban the dismissal of state workers whose position has been scrapped."


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