ATHENS — The European Union’s top economic and financial official says Greece could return to growth in the second half of 2016, but that much work remains to be done on reforms the country has committed to in its third bailout program.
Speaking Nov. 4 during a visit to Athens, Pierre Moscovici said compromise was possible on how to tackle the problem of distressed mortgages but that decisions need to be taken quickly if Greece is to receive funds from its new 86-billion euro, three-year bailout. Pension reforms will also need to be made this month, he said.
A raft of spending cuts and tax hikes have already been passed in Parliament. This, Moscovici said, was positive but “There remains a lot of work to be done.”
He said a day before that Greece and its European creditors should be able, by next week, to iron out disagreements on reforms the country must undertake to receive a new rescue loan installment.
Moscovici said that while significant progress has been made so far, “three or four” issues remain unresolved.
These include measures to protect Greek-mortgage holders from foreclosures, as well as whether sales tax will be imposed on private education — from kindergartens and schools to music, language and dancing lessons.
But Moscovici voiced confidence that a compromise will be found ahead of a Nov. 9 meeting of finance ministers from Greece’s Eurozone partners.
“We are not considering the case of failure, we are looking only for success,” he said, after talks in Athens with Greek Finance Minister Euclid Tsakalotos.
A successful outcome would allow Greece’s creditors to unlock a 2 billion-euro ($2.4-billion) loan installment, and resume talks on further reforms on which another one billion euros in rescue loans is contingent.
The money comes from the third bailout deal Greece signed in the summer, after months of dithering that nearly led to the country’s expulsion from the Eurozone.
The next step will be to start negotiations on how to lower Greece’s debilitating debt pile, and on injecting taxpayer funds into Greece’s battered banking system — a process which must be completed by the end of this year to save depositors with over 100,000 euros in the bank from being forced to contribute to the recapitalization.
“We are all aware that further measures will have to be adopted in coming days and weeks,” Moscovici said, voicing confidence that the year-end deadline can be met.
Tsakalotos said he expects talks can start in December on cutting Greece’s huge debt load, probably through generous repayment extensions and rate cuts.
“I am confident that the discussion will start before Christmas — I cannot of course guarantee that it will end before Christmas because it is a complicated issue,” he said.
“If there is good faith on both sides there are many technical solutions to address the issue of the debt, but if there is no good faith I can think of arguments against any solution whatsoever.”
Moscovici met Prime Minister Alexis Tsipras earlier Nov. 2. On Nov. 3, he is due to see Labor Minister Giorgos Katrougalos, who faces the daunting task of reforming the country’s moribund pension system.
The left-led government has said it intends this month to present its final proposals, which are expected to involve a basic pension of just under 400 euros per month, augmented by a sum directly linked to workers’ contributions.
Also Nov. 2, Greece signed a deal for 285 million euros in loans from the European Investment Bank, which is the EU’s long-term lending institution. The loans will be used for energy projects.