A delegation of European and International Monetary Fund officials began a two-week visit to Greece Monday to assess the country’s reform progress that will determine its eligibility to receive further funding under an EUR110 billion loan deal.
The interim review by the so-called troika of European Commission, European Central Bank, and IMF officials comes amid the latest signs of labor unrest as air traffic controllers and truck drivers staged nationwide protests over the government’s reforms.
At Athens International Airport, thousands of travelers and dozens of flights were delayed after air traffic controllers decided to stage a “work to rule” protest Sunday. The controllers are due to decide later today whether to proceed with a possible strike, a move that many fear will affect Greece’s all-important summer tourist season.
Meanwhile, on the streets of Athens, motorists formed long lines at local gasoline stations to fill up their tanks amid fears that an open-ended truckers strike would soon lead to fuel shortages around the country.
Liberalizing Greece’s tightly regulated sectors, such as trucking, is one of the tough reforms that the socialist government has promised the EU and IMF in exchange for the loans.
But the truck drivers say the reforms will unfairly open the market to new trucking licenses, sharply undercutting the value of existing licenses already in circulation, which are now worth anywhere between EUR90,000 and EUR200,000 each.
“We vow to fight these reforms until the bitter end,” said Giorgos Tsamos, president of the truckers’ union, which began its strike late Sunday.
Facing prohibitive borrowing costs on the international markets, the Greek government in May agreed to a three-year austerity and reform program in exchange for the EU and IMF aid.
So far, Greece has received EUR20 billion and expects to receive another EUR9 billion disbursement in September, provided that the government has lived up to its commitments. Another EUR9 billion is expected to be disbursed in December, pending a further review later this year.
Approval seems likely. An interim IMF report issued earlier this month said Greece’s reform program seems “broadly on track,” while the government says it has slashed Greece’s central government budget deficit by 45.4% in the first six months of 2010. That puts it on track to achieve a year-end deficit target equal to 8.1% of gross domestic product–down from a record 13.6% last year.
However, a series of concerns linger about public-sector spending that isn’t directly included in the central government budget, which will affect the government’s finances by year end.
“The focus of the troika’s visit is to see what is happening in the broader public sector overall,” said Nikos Magginas, a senior economist at the National Bank of Greece. “As far as the central government budget is concerned, the government is on target. But in the broader public sector there are a lot of gray zones and the troika will try and figure out where the hemorrhages are.”
Specifically, the focus of the mission will be big deficits in the country’s national health-care system and public hospitals, as well as spending by municipalities and local governments. Many of Greece’s local governments have operated with deficits for years, and analysts fear their spending may rise further ahead of local elections scheduled for October.
There are also concerns about Greece’s deficit-ridden pension funds, some of which have already spent all, or close to all, of their allotted outlays for the year and will require transfers from the central government.
In a sign that Greece’s government is still struggling to get a handle on the country’s massive public sector, the government last week announced that it was extending a two-week survey aimed at counting public-sector employees.
The census, which began in early June, will now run until July 29, according to government officials, and has so far registered some 747,000 employees on government payrolls.
No one knows the exact number of public-sector workers in Greece. Until recently, finance ministry officials estimated the entire public-sector workforce, including central government employees, local government employees and workers in state-owned companies, at around 700,000. But other estimates range as high as 1 million or more. Greece has a total labor force of about 4.5 million workers.
By Alkman Granitsas and Nick Skrekas
Tags: business, economists, economy, european central bank, european economy, financial, financial markets, financial system, IMF, interest rates, loans, stock market
[...] European, IMF Officials Begin Visit To Greece Amid Protests … [...]
[...] European, IMF Officials Begin Visit To Greece Amid Protests … [...]
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