Reform delays imperil bailout exit date, no debt relief without privatisation

For weeks the government and Greece’s creditors have said that 21 June is D-day for closing the fourth and last bailout evaluation, opening the way for an exit from the current bailout programme in August, albeit with heightened EU supervision.

Most recently, however, creditors have been emitting warning signals about delays in implementing crucial reforms that are among the eighty preconditions for Greece to complete the programme.

Chief among these are the privatisations that the government has agreed to, with a particular focus on the energy sector and the Public Power Corporation.

A teleconference yesterday between representatives of the lenders and top finance and economy officials huddled on the sixth floor of the finance ministry was occasion to admit lingering, intractable problems and ways to address them.

Finance Minister Euclid Tsakalotos, Energy and Environment Minister Yorgos Stathakis, Deputy Minister to the Prime Minister Dimitris Liakos, and Dimitris Papagiannakos, the government’s general secretary for coordination, were those present on the Greek side, as their portfolios are directly related to the problem issues in completing the fourth evaluation.

No privatisation, no debt relief

The stern message from lenders is that privatisation is the paramount reform, and that it is directly linked to all prospects of debt relief.

A Greek source privy to the talks conceded that there are “technical difficulties” in pushing forward privatisation in the energy sector, and most particularly the law on the Public Power Corporation and the privatisation of its four lignite plants.

“It is a difficult matter that entails a number of technical issues. I do not think we will be able to bring it to pass by June,” the source said, thus indirectly casting doubts on the timetable of the planned exit from the bailout programme on 20 August.

For the programme to be extended beyond that, Athens must submit a request. That would be a political disaster for a government that has advertised that it will lead the country out of bailout supervision with a “clean exit”.
The European Commissioner for Economic and Financial Affairs told the European Parliament that for the programme to be completed on schedule, all decisions must have been taken by the 21 June deadline, or very shortly thereafter,

Aside from that, there has also been government foot-dragging on changes in the cadastre, in completing an overhaul of property tax valuations nationwide, and staffing the public sector and ministries with permanent supervisors who are selected on a meritocratic basis and will serve for the long haul.

Ministry general secretaries and supervisors have customarily been party hacks, in many cases unsuccessful MP candidates, perpetuating a patronage system that breeds mediocrity and inefficiency.

All these preconditions must be met satisfactorily in order to complete the fourth and last bailout evaluation.

Reporting by Elena Laskari

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