Ondanks stakingen zien EU en IMF vooruitgang in Griekenland (en)
EUOBSERVER / BRUSSELS - The EU and IMF have endorsed Greece's economic programme, required in return for a €110 billion bail-out agreed in in May.
Amid a paralysis of the country by striking lorry drivers, violent clashes with riot police and small-scale bombings, a team of staff from the European Commission, the European Central Bank and the International Monetary Fund have been in Athens this past week for the first quarterly review of the government's austerity programme.
"Our overall assessment is that the programme has made a strong start," the commission-ECB-IMF ‘troika' said mid-Thursday in a statement.
"The end-June quantitative performance criteria have all been met, led by a vigorous implementation of the fiscal programme, and important reforms are ahead of schedule," the troika statement continued.
In May, the EU and IMF agreed to loan Greece €110 billion over three years in return for a programme of public sector cuts, privatisation and tax reforms - the fourth such austerity package announced since the beginning of the country's debt crisis - that if the government is able to impose them despite widespread popular opposition will thoroughly transform the relationship of the state to its people.
The troika reported that Greek authorities have "kept spending significantly below budget limits at the state level."
The statement noted approvingly that these cuts at the national level had "offset slippages" in expenditure at the regional and municipal level, particularly regarding local government and funding of hospitals and social security.
"Impressive progress is being made on structural reforms. The mission welcomes the parliament's landmark pension reform, which is far-reaching by international standards," the troika said.
As part of the austerity programme, the government has indexed retirement age to life expectancy changes, equalised men's and women's pension age limits and raised the retirement age of public sector employees from 61 to 65.
The changes to pensions led to pensioners in May throwing rocks at the parliament as other protesters attempted to storm the building.
There have been a series of one-day general strikes since the beginning of the year in opposition to the multiple austerity programmes. In the spring, three bank workers were killed when a contingent of protesters set fire to a bank during one of the general strikes. Small-scale terrorist attacks blamed on previously unknown left-wing groups, have also returned, echoing the "urban guerilla" violence of the 1970s. Some 13 incidents, including bombings of political party offices, MP homes, a bank, the Athens Stock Exchange and government buildings, have taken place.
On Saturday, a guerrilla group called the Sect of Revolutionaries, claimed credit for the murder of Sokratis Giolas, a blogger journalist close to anti-terrorist police units. "Our guns are full and they are ready to speak," the previously unknown group said in a communique. "We are at war with your democracy."
The EU-IMF team also saluted the "substantive labour market reform underway" and the changes to the transport sector: "Important progress has already been made with liberalisation of road haulage and energy."
The cheery approval of the changes, affecting lorry drivers' licences, was in stark contrast to the disapproval of those affected, who had paralysed the country with fuel shortages, crippled its travel industry and stranded hundreds of thousands of tourists for much of this week. The government had issued an emergency decree and enacted ‘civil conscription' to try to force the lorry drivers back to work. Some 500 strikers attempted to storm the transport ministry and clashed with riot police who managed to chase them away after employing tear gas. It was only when the government called out the army did the truckers back down temporarily in exchange for further talks.
The government wants to open up the sale of licences by making many more available. They hope that by doing so, it will increase competition in the sector and push down freight costs.
But the drivers have to pay the government between €100,000 and €200,000 for a licence. While they are able to sell the licence on at the end of their careers, they complain that they often have to sell their house to get started. The government plans would bankrupt them, they say. In one noted case, a 67-year old driver who had been hauling for four decades had tried to sell his lorry in recent months without luck. Last week, he hanged himself off a bridge.
Some argue however that the sector, a ‘closed profession', is riven with nepotism and corruption. The troika appear to take this view, warning: "The challenge facing the government in this regard will be to overcome resistance from entrenched vested interests to opening up of closed professions, deregulation, [and] implementation of the [EU] services directive."
The EU-IMF report card however was not all positive, with the troika stressing "important challenges and risks remain."
There has been a "moderate deterioration" in capital adequacy in the financial sector and the number of bad loans have increased. "Continued close monitoring of the financial sector will be important in the period ahead," reads the statement.
The troika also note "another key challenge" in chasing down tax evaders by the rich. This is needed not just boost state revenues, but also "to promote the overall fairness of the adjustment programme."
Additionally, GDP is expected to decline by four percent this year and roughly 2.5 percent in 2011. Inflation has gone up slightly higher than expected, to an estimated 4.75 percent for 2010, although this is largely as a result of increased VAT slapped on consumer items. Otherwise, inflation is expected to decline rapidly.
Indeed, as economists who oppose the EU-IMF-imposed programme note, the austerity is likely to shrink the economy, making it more difficult for the country to repay its loans, exacerbating the nation's sovereign debt crisis.
The review issued on Thursday and agreed with the Greek authorities must now be signed off by the commission and the IMF board, a move expected in early September. Such approval will allow the disbursement of €9 billion.
However, no sooner will sign-off for this tranche of cash be given, a troika mission will return with its fiscal fine toothcomb for the next quarterly review in October.