ATHENS (Reuters) – Greece and its foreign lenders will aim to resolve their differences over massive layoffs and home foreclosures when they resume a stalled review of the country’s bailout program, two senior government officials said on Tuesday.
The review, set to resume on Wednesday, has been interrupted twice since September due to the reluctance of Greece’s fragile, austerity-weary coalition government to adopt any more unpopular measures to satisfy lenders.
Chief inspectors from the European Union, European Central Bank and International Monetary Fund troika visit Athens periodically to check on progress on its bailout commitments before releasing further loan installments.
“Structural reforms remain the main friction points with the troika – foreclosures, massive layoffs and cuts in employer contributions to the social security fund,” one of the officials told Reuters, declining to be named.
“Negotiations on these issues remain quite difficult.”
Greece, which nearly went bankrupt last year as it struggled to meet its bailout pledges, has no immediate funding needs, easing pressure for a deal between the two sides, which senior EU officials say is not expected until January.
Its next bond payment falls on January 11, when 1.85 billion euros of Greek bonds mature, according to Thomson Reuters data. The following big bond maturities, worth about 9.3 billion euros, fall in May.
Athens is due to receive up to 5.9 billion euros ($8.1 billion) of loans by the end of the year, according to the latest schedule published by its creditors.
But it is likely to receive only 1 billion by the end of the year, providing it can strike a deal with the lenders over state-owned Hellenic Defense Systems, which inspectors want Athens to shut down or downsize. The government has resisted a complete shutdown of the firm.
“It is likely that there could be an agreement (on EAS), possibly by the end of this week, and we could get the 1 billion tranche which is due from the summer,” the official said.
A second official said an agreement on the other sticking points – mass firings and foreclosures – to unlock the remaining 4.9 billion euros in funds was unlikely to be reached before January.
The troika wants Athens to lift a moratorium on foreclosures on primary homes, but the government wants to extend the protection for crisis-hit households which is due to expire at the end of the year.
It wants to lift the ban only for borrowers who are found to have sufficient funds but are unwilling to pay off their loans, knowing their homes cannot be seized.
The troika is also pressing Greece to ease restrictions on large-scale corporate firings, which Athens has resisted, saying labor laws have already been relaxed enough.
Athens could always opt to issue T-bills to pay maturing bonds if the 4.9 billion euro tranche is not released, the first official said.
“I don’t think that we’ll have to resort to it but technically we are ready to do it if needed,” the official said.
($1 = 0.7289 euros)
(Reporting by Lefteris Papadimas, writing by George Georgiopoulos, Editing by Deepa Babington; Editing by Hugh Lawson)
