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EU-IMF to assess Greek progress

July 23, 2012

Struggling Greece seems increasingly unlikely to get more aid as the 'troika' of Greek creditors prepares to return to the debt-laden nation. Athens wants a two-year stay on reforms, but Germany and others reject this.

Flags of Europe and Greece
Image: AP

Greece is due to return to the agenda of the European Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB) on Tuesday, when the auditors of the so-called 'troika' will assess progress on pivotal structural reforms.

By June, the new coalition government in Athens was originally supposed to identify spending cuts worth 11.5 billion euros ($13.9 billion) for the next two years, and initiate a privatization drive halted for months as the result of a general election in June.

The troika report will determine whether Greece is entitled to receive fresh loans worth 31.5 billion euros by September under a 173-billion-euro bailout provided by the EU and the IMF in return for economic reforms and deficit reduction.

As Greek state income is over 1.5 billion euros short of target this year, Greek Prime Minister Antonis Samaras said he hoped for a two-year extension of the fiscal adjustment in view of an "unprecedented crisis."

"We are already in the fifth year of a recession", Samaras said on the sidelines of a meeting with former US President Bill Clinton in Athens on Sunday, adding that this was Greece's version of "the Great Depression."

Tightening the screws

Without the next tranche of the bailout program, Greece would default on its remaining obligations and possibly be forced to leave the euro area.

German Finance Minister Wolfgang Schäuble on Monday warned Greece that it must redouble its efforts to comply with bailout conditions imposed by its creditors.

"If there were delays, Greece must make up for them", he told Germany's tabloid daily "Bild", and added that he would wait for the new findings of the troika before saying if Greece can stay within the eurozone.

German Economics Minister Philipp Rösler also raised the pressure on Athens, claiming that the idea of Greece leaving the eurozone had "lost its horror."

"I'm more than skeptical", he told ARD public television on Sunday, saying that it was "probable" that Greece would be "unable to fulfill the conditions imposed on it."

Mounting doubts

Adding further pressure, the European Central Bank (ECB) said Friday it would no longer accept Greek sovereign bonds as collateral for bank loans until the end of the troika audit.

Meanwhile, a report by the German news magazine "Spiegel" on Monday cited senior European Union diplomats as saying that the International Monetary Fund (IMF) was no longer willing to offer Greece further aid.

However, the same news magazine also quoted a different diplomatic source as saying that, as part of the troika, the IMF would not want to "preempt its conclusions."

uhe/tj (dpa, AP, AFP)