Greece faces standoff over bailout funds after Athens fails to impose reforms


The Guardian — Greece is facing another bailout standoff with its creditors amid reports that eurozone countries will refuse to release additional funds to it this month.

It was said  that Athens has implemented only two of the 15 reforms that were a condition of last year’s rescue package. EU officials told German daily Handelsblatt that Greece has delayed privatising state assets, adding to the frustrations of eurozone finance ministers who will discuss progress on Friday.

Further funds are due to be disbursed under the European Stability Mechanism (ESM), which will give Greece up to €86bn to pay back debts by 2018 in return for reforms.

After approving a first tranche of €10.3bn this spring, of which €7.5bn has so far been released, the 19 finance ministers are due to disburse the rest this month but might employ their usual strategy of withholding payment to put pressure on Athens in accepting further measures.  Another eurogroup finance ministers’ meeting is planned for 21 September.

The gridlock report came after the head of the ESM said at the weekend that Greece should be able to secure at least short-term debt relief measures but only if it began implementing the remaining reforms.

“We hope the government implements remaining prior actions very soon,” he added. EU officials are demanding that Athens pushes on with plans to set up a new privatisation fund, sell specific state assets, and reform its civil service.

Eight years into the country’s financial crisis, life has become harder for most Greeks. Unemployment is the highest in Europe and one survey in June found that extreme poverty had risen from 2.2% of the population in 2009 to 15% – a total of 1.6 million people – last year.

Longer-term relief to help the country reduce its crippling debt of 176% of GDP will not follow until after the end of the bailout, Regling said. However, the International Monetary Fund – which is not participating in Greece’s third rescue programme – has insisted that long-term relief including debt forgiveness must happen sooner.

The IMF also argues  that the targets of 3.5% primary surplus beyond 2018  that Athens was forced to agree with the European lenders are unattainable