Officials from the European Union, International Monetary Fund (IMF) and the European Central Bank will press Greece for more structural reforms such as privatizations and restructuring of loss—making companies, reports said on Monday.
The team of officials have been in Athens for the past week to review the debt—ridden country’s finances and reforms ahead of a second loan instalment of 9 billion euros due in mid—September.
Greece is trying to shore up it public finances and meet tough fiscal targets agreed upon with the IMF and its euro-zone partners in exchange for a 110—billion—euro (134 billion dollar) emergency funding package to avoid default.
A combination of spiralling debt, unreliable official government statistics and street protests saw economic confidence in Greece plummet at the start of the year.
Reports said the team of foreign auditors will present finance ministry officials with a report outlining the progress made in cutting the massive deficit later this week, stressing that greater efforts still need to be made in fighting tax evasion and cutting wasteful spending due to mismanagement of social security funds and public hospitals.
It is expected that EU/IMF officials will also press the government to restructure the loss—making Greek Railway Service and proceed with the privatization of the Public Power Corporation.
Labour unions have staged repeated strikes and protests these past few months against the planned austerity measures, which include salary cuts, tax hikes and pension reforms.
European Union policymakers and investors are closely monitoring public reaction amid concerns that large—scale social unrest could prevent the government from pushing through tough measures.
Officials are already bracing for more demonstrations and strikes in the fall when they will begin to implement many of the unpopular reforms which will lead to lay—offs.
Greek lorry drivers were back behind the wheel on Monday, following a week—long strike that led to fuel and fresh produce shortages.
Lorry drivers had walked off the job to protest the government’s plans to cut licence charges and liberalize their profession, as part of major reforms required of Greece to boost competition and one of the conditions for the bailout package.
Other professions which the ruling Socialist government is determined to open up to competition include taxi drivers, lawyers, pharmacists and architects.
Aside from liberalizing closed professions, the group of foreign experts is also expected to point out the need for Greece to boost economic growth and investment and offer greater support to its banking system, reports said.
In addition, it is expected the auditors will urge Greece to reign—in high inflation and re—think the high costs involved in restructuring regional and municipal offices.
Athens has promised to push through deficit—reduction measures totalling 45 billion euros over 2010—2013. It aims to shrink its budget deficit by 5.5 percentage points to 8.1 per cent of gross domestic product this year and to below the EU 3—per—cent cap by 2014.
Greek finance officials have said that while the country has avoided bankruptcy the recession it is currently facing will worsen until the middle of 2011.
The majority of Greeks are growing increasingly pessimistic about the future of the country’s economy, with more than 70 per cent fearing more painful reforms and civil unrest.