EU, Greek Leaders Predict Deal to Release Aid Payouts by Jan. 1

European Union and Greek leaders predicted an accord to unlock aid payments to Greece would be reached by the time the country takes over the EU’s rotating presidency on Jan. 1.

European Commission President Jose Barroso and Greek Prime Minister Antonis Samaras highlighted Greece’s progress in narrowing the budget deficit and bolstering the recession-wracked economy. They said the current review of Greece’s eligibility for more loan payouts wasn’t at an “impasse” after international inspectors left Athens last month without a deal.

“I’m optimistic that, within this year, the whole package of this negotiation will be positively addressed and solved,” Samaras told a press conference today in the Brussels-based commission, the EU’s executive arm. “We’re still on the negotiation train.”

Locked in talks with the euro area and the International Monetary Fund to qualify for further payouts of emergency funds, the Greek government is resisting any extra fiscal tightening as it clings to a four-seat majority in parliament and the economy contracts for a sixth year. Since early 2010, Greece has received two rescues totaling 240 billion euros ($325 billion) in return for bringing public spending under control.

In late October, the international creditors held that Greece’s 2014 budget hole may be around 2 billion euros, while Athens asserted the fiscal gap was no more than a quarter of that sum. Euro-area and IMF inspectors have yet to announce a date for a return to the Greek capital to resume talks, raising the prospect that Samaras’s plan to showcase Greece during its six-month EU presidency would be spoiled by the spat with creditors.

Current Mission

“I am confident that we’ll find a solution concerning the current mission,” Barroso said at the press conference with Samaras. “I don’t consider it an impasse.”

One obstacle in the current review is that the Greek government disagrees with its creditors over how far it should start letting banks claim the homes of people who don’t pay their mortgages, fearing a political and social backlash. Barroso signaled sensitivity to the position of Samaras, who took office in June 2012 after a national political stalemate that led to speculation Greece would be forced out of the euro.

“We have listened carefully to the arguments put forward by Prime Minister Samaras explaining in very concrete terms how he sees the situation in Greece,” Barroso said. “We are aware of that situation.”

Rescue Program

In addition to trying to keep aid flowing under the second rescue program, Samaras is seeking a third package of support in 2014. His government predicts that it will post a budget surplus excluding interest payments in 2013, a year ahead of schedule, and that the economy will grow in 2014 for the first time since 2007.

The country’s budget deficit in 2009, when Greece triggered the euro-area debt crisis, was five times the EU limit.

“Greece has made impressive progress,” said Barroso. “The hard work is paying off.”

EU Economic and Monetary Affairs Commissioner Olli Rehn also sounded an upbeat note, telling a Brussels conference today that the parties were working “intensively” to conclude the current review.

“We are making progress,” Rehn said. “We need to recognize that Greece has come a long way since 2009 to address the underlying causes of the crisis.”

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE