Leaked Greek troika report: devil in the details

H ΕΚΘΕΣΗ ΤΗΣ  ΤΡΟΙΚΑΣ ΕΔΩ

ΠΗΓΗ: FT

It may be incomplete and its conclusions subject to debate, but on Monday night eurozone finance ministers got a draft copy of the much anticipated troika report on Greece. As we report online, there’s not much in it we didn’t already know – including the fact Greece will need as much as €32.6bn in new financing if the programme is extended through 2016.

But the language in the report is, as usual, pretty revealing. We’ve posted a copy of the draft here. It makes clear that eurozone creditors will be leaning on Greece pretty heavily for the foreseeable future. This, in spite of the fact the Greek parliament barely passed €13.5bn in austerity measures last week amidst serial defections form its governing coalition.

The most glaring is that Athens will have to find an additional €4bn in austerity measures for 2015 and 2016, meaning the pain isn’t done yet. But it also implies there are some more shorter-term measures that haven’t been completed yet that the troika is expecting.

Greece has revamped its reform effort and fulfilled important conditions…. These steps, which have tested the strength and cohesiveness of the coalition supporting the government, leaving also some scars therein, significantly improve the overall compliance, provided some remaining outstanding issues are solved by the authorities.

In other words, not only is there more to do, but what remains might be difficult for the new Greek government to achieve. The political risks are very clearly spelled out elsewhere in the report. Indeed, the last paragraph of the report’s executive summary suggests a collapse of the bickering coalition may just be the biggest risk to the bailout programme.

Risks to the programme remain very large.… The key risks concern the overall policy implementation, given that the coalition supporting the government appears fragile and some components of the programme face political resistance, despite the determination of the government…. A return to sustained growth can only be achieved when the structural reform agenda is fully and swiftly implemented. This will require breaking the resistance of vested interests and the prevailing rent-seeking mentality of powerful pressure groups.

For those who want to delve into the minutia, here are a few places to find the details you crave. On the top of page 18 is a chart with the new budget targets. In sum, everything that Greece had to hit in 2014 under the old programme (a deficit of 2.2 per cent of gross domestic product; a primary budget surplus of 4.5 per cent) must now be achieved by 2016.

On page 28 are the revised targets for Greek privatisations, which, in the words of the report, have been “significantly scaled down”. Specifically, the troika is now expecting only €10.4bn in sales by 2016, as opposed to the old programme which anticipated €19bn in receipts by 2015. The IMF is said to be sceptical of even those more pessimistic projections.

Greece’s new financing needs are spelled out on page 40, though it’s interesting to note those figures are in brackets, meaning they could change once the debt sustainability report (which is ominously omitted on page 3) is completed.