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

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Reimagined: Gwyneth Paltrow and Toni Collette in the film adaptation of Jane Austen's Emma
books
Arts and Entertainment
Jesuthasan Antonythasan as Dheepan
Cannes 2015Dheepan, film review
Sport
sport
News
Richard Blair is concerned the trenches are falling into disrepair
newsGeorge Orwell's son wants to save war site that inspired book
Arts and Entertainment
The pair in their heyday in 1967
music
Latest stories from i100
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

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine