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Greece could get more cash after Troika agree next step in bailout programme

Meanwhile, IMF chief Christine Lagarde denied any wrongdoing as she was questioned for the third time by French prosecutors in a corruption case.

International Monetary Fund mission chief Poul Thomsen, center, escorted by a Greek plain clothed police man, enters the Greek Ministry of Finance in central Athens.
International Monetary Fund mission chief Poul Thomsen, center, escorted by a Greek plain clothed police man, enters the Greek Ministry of Finance in central Athens.
Image: Petros Giannakouris/AP/Press Association Images

THE TROIKA HAS reached a basic agreement on the next steps forward for Greece’s rescue program in a long-delayed step that could free up fresh funds for Athens.

The International Monetary Fund, the European Commission and the European Central Bank said the Greek government was committed to keeping the bank sector healthy, one of the issues that had apparently held up the agreement for a new funds release for more than five months.

“The mission and the authorities agreed that the economy is beginning to stabilize and is poised for a gradual resumption of growth,” they said in a statement.

Fiscal performance is on track to meet program targets… The authorities are making progress on structural reforms to improve the growth potential and flexibility of the Greek economy.

They said the government is committed to doing all that is necessary to ensure it banks remain healthy and sufficiently capitalized in order to support an economic rebound.

But they warned that the banks still faced potential challenges to maintaining adequate levels of capital, “in particular, if the authorities and banks do not urgently and efficiently address the high level of non-performing loans.”

Swift recapitalization of banks will strengthen their balance sheets.

The agreement was done at the staff level after a review mission to the eurozone member country that had been expected to conclude around last September.

The statement said the Eurogroup and the IMF executive board would likely review the agreement “in the coming weeks.”

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Klaus Masuch of the European Central Bank, right, and European Commission official Matthias Mors, enter the Greek Ministry of Finance in central Athens, past a wall spray-painted with slogans against Greece’s bailout inspectors. (Image Credit: AP Photo/Petros Giannakouris)

Approval would allow a fresh release of funds to Athens that will help it continue to bridge fiscal shortfalls while implementing more reforms required under the bailout program.

Rescue funding

The quarterly audits by the so-called international Troika determine whether Greece can get rescue funding, with the next tranche worth some €8.5 billion.

Hard hit by the economic crisis, Greece is experiencing a sixth straight year of recession and has a staggering 28 percent unemployment rate.

Ireland’s recently fell to 12.1 per cent.

€110 billion

The Troika first bailed out debt-riddled Greece in 2010 with a program worth €110 billion, compared to Ireland’s €67.5 billion.

When that failed to stabilize the economy, they agreed a much tougher second rescue in 2012 worth €130 billion, plus a private sector debt write-off of more than €100 billion.

Meanwhile, IMF chief Christine Lagarde denied any wrongdoing as she was questioned for the third time by French prosecutors in a corruption case.

image
International Monetary Fund chief Christine Lagarde arrives at the courthouse. (Image Credit: AP Photo/Christophe Ena)

Lagarde was grilled for more than 10 hours over her handling of a 400 million euro ($557 million) state payout to disgraced French tycoon Bernard Tapie in 2008 when she was finance minister.

Speaking afterwards Lagarde said the hearing had been “very respectful, very courteous”.

I have always acted in the interest of the country and in accordance to the law.

Lagarde was questioned by prosecutors working for the Court of Justice of the Republic, a special court that probes cases of ministerial misconduct.

Tapie is suspected of receiving favourable treatment in return for supporting ex-president Nicolas Sarkozy in the 2007 election.

The payout was connected to a dispute between the businessman and partly state-owned bank Credit Lyonnais over his 1993 sale of sportswear group Adidas.

- © AFP, 2014

That’s all, folks: IMF praise Ireland, but lay out important challenges >

March 2013: Investigators search home of IMF chief Christine Lagarde >

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