Greece’s international creditors indicated the outlook for the country’s bailout program remains uncertain, even as lenders paved the way for Greece to gain the latest payment of bailout money.
The statement came from experts of the troika of the European Commission, the European Central Bank and the International Monetary Fund.
In an update, the troika of creditors indicated that while some important progress continues to be made, policy implementation is behind in other areas.
The troika of creditors said they completed their fact checking mission and observed the macroeconomic outlook remains broadly in line with program projections, with prospects for a gradual return to growth to 2014. However, they indicated the outlook remained uncertain.
Earlier, a senior euro zone official expressed dissatisfaction with the way Greece has managed things, particularly failing to reform its public sector.
Greece – Delay In Release of € 8.1 Billion
The German daily Süddeutsche Zeitung on Monday said the troika of creditors expressed dissatisfaction with Greece government progress and hence the finance ministers would likely decide to delay the release of the € 8.1 billion and might pay the amount in a staggered manner, as opposed to a lump sum payment.
The creditors were particularly displeased with the fact that Greece had failed to meet an agreed deadline for reducing the number of public sector workers, according to the German daily.
Earlier, the International Monetary Fund has threatened to suspend financial aid to Greece in July, unless European leaders fill the 3.7 billion euro shortfall in the 172 billion euro Greece rescue program. The shortfall arose due to European central banks refusing to roll over 3.7 billion euro in Greek bonds they hold.
Citibank’s Views
According to Citibank research team’s recent report, only €4.8 billion would be approved by the Eurogroup today, and this would probably be disbursed in two tranches in July and September.
Guillaume Menuet and the team at Citi believes Greece and the international lenders have to work out a pay out to Greece of “SMP Profits”. This relates to profits made on Greek bonds held by the ECB and the euro area national central banks bought through the SMP bond-buying program in 2010-2011.
According to Citibank analysts, with just two months to go before the crucial German elections, they don’t anticipate the Greek negotiations would reach the extreme levels of brinkmanship seen in the past.
