International creditors predict Greece will return to growth in 2014

EU, ECB and IMF say the next slice of financial support will be released soon

Greece cleared a key hurdle in its drive to receive its next batch of bailout loans after international debt inspectors said they had reached an agreement over the country's economic reforms, including the firing of thousands of civil servants.

The review by delegates from the International Monetary Fund, European Commission and European Central Bank, known collectively as the troika, is part of a regular process under which Greece receives installments of its multi-billion euro bailout if it meets certain conditions. Greece has been dependent on the rescue loans since 2010.

In total, Greece has been granted €270 billion in bailouts, which it receives gradually. In return, successive governments pledged to overhaul the Greek economy and have imposed stringent spending cuts and tax hikes.

The reforms have been painful. The country is mired in a deep recession, currently in its sixth year, and unemployment has spiraled to around 27 percent.

In a joint statement, the three institutions said recent steps taken by Greece indicate targets for March “are likely to be met in the near future” and that the country's debt sustainability “remains on track.”

As a result, the 17-nation eurozone could soon agree to disburse €8.8 billion (£7.5 billion ) pending from last month. The eurozone and IMF board are expected to approve the review in May.

However, the troika said the government must still be vigilant and “respond promptly to any slippages that may emerge.”

Almost every troika review since the start of the bailout has been delayed due to targets being missed or disagreements with the government. Apart from the initial installments, no rescue loans have been disbursed on time.

“Greece has indeed come a very long way,” said the IMF's troika representative Poul Thomsen, speaking during a conference on the economy in central Athens. “The fiscal adjustment in Greece has been exceptional by any standard.”

If the country continues implementing its pledged reforms, it will be able to achieve its overall budget targets without imposing any further austerity measures, Thomsen said.

The institutions still predict Greece will return to growth gradually in 2014, and say this is being helped by improved wage flexibility helping to restore competitiveness.

The review also covered the dismissal of civil servants, with firings “targeted at disciplinary cases and cases of demonstrated incapacity, absenteeism, and poor performance, or that result from closure or mergers of government entities.”

Finance Minister Yannis Stournaras, speaking at the same economy conference in Athens, said “several thousand” underperforming public sector workers would be dismissed, and new, capable employees would replace them.

Reports have indicated that about 4,000 civil servants are to be fired by the end of this year, and 11,000 by the end of 2014.

Until now, civil servants were constitutionally guaranteed jobs for life under a law dating from the early 20th century to protect public sector workers from unfair dismissal due to political affiliations. But the law was widely abused, with accusations rife that politicians across the spectrum stacked the civil service with employees as favors in return for votes.

The result was a massively bloated, inefficient and corrupt civil service, the size of which the state was unaware until it started a public sector census at the start of the bailout, and discovered it had about 700,000 civil servants in this country of less than 11 million people.

“It's still a taboo to dismiss people from the public sector. There have been no forced dismissals of employees whose positions are eliminated or who for some reason do not perform,” Thomsen said. “So this dramatic rebalancing of the economy ... has caused a sharp increase on unemployment in the private sector while public sector employees have been protected. This is another source of the sense of lack of fairness in the process.”

Stournaras said Greece's main target now was to achieve a primary surplus of the budget — a surplus without taking into account interest payments on existing loans — this year.

Once this is achieved, Athens could request activation of something Greece's eurozone partners agreed on late last year — a further reduction in the country's private debt. In March 2012, Greece forced private investors to write off more than half the value of the government bonds they held.

Following the bond writedown, officially known as the Private Sector Involvement, Greece's debt is now mainly in public hands. A further debt reduction could come from easing the terms of the country's bailout.

“In my opinion, the major target now is to achieve a primary budgetary surplus this year so that we can ... ask for a drastic reduction in the public debt,” Stournaras said. “That will create a very positive boost in developments and would speed up our exit from the crisis.”

AP

News
Ian Thorpe had Rio 2016 in his sights
people
Sport
Jonathan de Guzman of the Netherlands and Willian of Brazil compete for the ball
world cup 2014LIVE BLOG: Hosts Brazil take on the Netherlands in third-place play-off
News
Tommy Ramone performing at The Old Waldorf Nightclub in 1978 in San Francisco, California.
peopleDrummer Tommy was last surviving member of seminal band
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
Several male celebrities have confessed to being on a diet, including, from left to right, Hugh Grant, Benedict Cumberbatch and Ryan Reynolds
life...and the weight loss industry is rubbing its hands in glee
Voices
Spectators photograph the Tour de France riders as they make their way through the Yorkshire countryside
voicesHoward Jacobson: Line the streets for a cycling race? You might just as well watch a swarm of wasps
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
Arts and Entertainment
'Eminem's recovery from substance abuse has made him a more potent performer, with physical charisma and energy he never had before'
arts + entsReview: Wembley Stadium ***
Sport
Joe Root and James Anderson celebrate their record-beaking partnership
cricketEngland's last-wicket stand against India rewrites the history books
News
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

C# Developer (HTML5, JavaScript, ASP.NET, Mathematics, Entity)

£30000 - £45000 per annum + Benefits + Bonus: Harrington Starr: C# Developer (...

C# Integration Developer (.NET, Tibco EMS, SQL 2008/2012, XML)

£60000 - £80000 per annum + Benefits + Bonus: Harrington Starr: C# Integration...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice