Greece likely to get bailout loans after review

By Elena Becatoros

Associated Press

Published: Tuesday, Oct. 11 2011 8:40 a.m. MDT

Civil servants protest outside the Greek Parliament in Athens, on Tuesday, Oct. 11, 2011. Greece's international debt inspectors have completed their review of the government's reforms, saying Tuesday that if their conclusions are adopted by the eurozone and IMF, Athens is likely to receive the next batch of its bailout loans in early November.

Petros Giannakouris, Associated Press

ATHENS, Greece — Greece is likely to receive the next batch of its bailout loans in early November, international debt inspectors said Tuesday, if the eurozone and IMF approve the conclusions of the financial review they have completed.

The inspectors, however, said Greece's deficit targets for 2011 were "no longer within reach," and that while new austerity measures for 2012 were adequate, more was needed for the years 2013-14.

The report by the officials from the International Monetary Fund, European Commission and European Central Bank, collectively known as the troika, potentially averts a bankruptcy looming over Greece.

But their call for new measures reinforces the view that Europe's strategy in getting Athens out of its debt hole is not working as hoped and that an alternative approach is needed.

"Greece has missed the bus, yet again," said Vangelis Agapitos, an independent economist in Athens. The "troika is fulfilling its obligations and Greece, for one more time, is missing its targets on privatizations, on cutting the deficit, on doing the steps necessary to bring the economy into a competitive and efficient mode."

Greece has been dependent since May last year on a €110 billion ($150 billion) bailout package from other eurozone countries and the IMF. Without the next €8 billion loan installment, the country has said it would run out of funds to pay salaries and pensions in mid-November.

To qualify for the funds, the government has pledged reforms aiming to slash its deficit and overhaul the economy. But it has frequently missed its targets, forcing it to pile on ever more austerity measures such as increased taxes and cuts to public sector salaries and pensions.

That has led to frequent strikes and protests — on Tuesday, protesters took over several state buildings, including the Interior Ministry and the country's General Accounting Office. A strike by municipal workers has left piles of garbage on Athens' streets, while motorists formed long lines at gas stations after workers at a main refinery went on strike.

Outside parliament, as lawmakers began debating legislation for the latest austerity reforms, hundreds of local government workers blocked traffic at the main entrance, blowing whistles and chanting anti-government slogans.

"We believe that voting this bill bolster the country ... We have 10 days in front of us for the bill to be passed," Venizelos said during a financial committee meeting in the legislature.

The government described the troika statement as "balanced, positive and practical," while opposition parties described it as a recipe for continued recession.

"The Greek people are making greater sacrifices but state revenues are lower in the first eight months of the year, compared to 2010. That is something that should concern us. Judging by the statement of the troika, this will continue for some years to come," conservative committee debate leader Nicholas Legas said.

The troika had suspended its review in early September due to delays, returning to Athens about two weeks ago to complete their inspection. Their findings must now be approved by the other eurozone countries and the board of the IMF before Greece can receive the next loan installment. The troika said that would be "most likely in early November."

The acrimony accompanying the mission, and the fact that more corrections of Greece's austerity program are needed even after Athens passed new measures this summer — underline that the eurozone may be realizing that its handling of the country's problems need to be reassessed.

The payout of the next loan installment is also tied to a second rescue package for Greece agreed on July 21, which will likely see steep losses for banks holding the country's bonds to make the its massive debts sustainable.

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