Troika to assess how to get Greece back on track

The troika arrives back in Athens this morning with pressure mounting on the Greeks to speed up reforms as German politicians re-ignite the idea of kicking them out of the eurozone.

While the Bundestag, like most EU parliaments, closes for the holidays, a technical group begins assessing where the Greek economic programme is and how to bring it back on track. The European Commission confirmed the next tranche of bailout funds would not be paid before September, pending the assessment of the Greek programme.

However, they need to roll over a debt of around €3.6bn held by the ECB in mid-August and some liquidity to keep the country afloat.

The new Greek government wants to have an additional two years to bring the state deficit below 3% of GDP, and a European Commission spokesperson admitted that “significant delays in programme implementation have occurred due to parliamentary elections in the spring”.

The Commission’s competition spokesperson, Antoine Colombani, said that Greek banks, as part of their recapitalisation process, will undergo due-diligence audits and possible management shake-ups.

The new finance minister, Yannis Stournaras, is planning to cut €11bn off the budget through simplifying the tax system and bringing more wealthy Greeks into the tax net.

But the country will need additional money on top of the two loans worth more than €240bn. The troika team will assess how much more they will need and some reports put it at between €10bn and €50bn.

Behind the scenes the IMF has been making it known that it is not willing — or legally able — to continue to support Greece past a certain point. It contributed just €18bn, or 14% of the €130bn second aid package agreed in March.

The IMF failed to deny reports that it was considering suspending its support but a spokesperson in an email response to such reports in the German media said: “An IMF mission will start discussions with the country’s authorities on July 24 on how to bring Greece’s economic programme, which is supported by IMF financial assistance, back on track.”

Getting all eurozone countries to agree the extra funds will be a major struggle with Philipp Roesler, German economy minister, laying down a marker that the troika must find that Greece is fulfilling the conditions of its programme.

“If Greece does not fulfil its conditions, then there can be no further payments to Greece,” Mr Roesler, who is leader of the Free Democratic Party, the junior coalition government partner, told the major German TV channel, ARD.