Greece Resists Troika on Third Bailout as Draghi Protests Delays

Greece fought off calls to consider a third bailout as European Central Bank President Mario Draghi warned that the pace of economic fixes is slowing, officials said after euro-area finance ministers met yesterday.

Greece has ruled out further aid -- which would come with another raft of conditions -- after its current rescue ends, a Greek official told reporters in Brussels. According to the so-called troika of International Monetary Fund, ECB and euro-area authorities, Greece may need one anyway, an EU official said.

Further emergency aid will probably be needed as the government still faces a funding shortfall, can’t count on financial-market support and is slipping further behind on its commitments to overhaul the economy, the EU official said. The troika’s concerns were underlined by Draghi’s warning to Greek Finance Minister Gikas Hardouvelis that Greece should not assume its reforms have been completed.

At stake is Greece’s ability to win debt relief from its euro-area creditors. This writedown is the main reward that authorities have to offer if Greece meets its commitments -- or withdraw if the Mediterranean nation falls short.

The troika wants Greece to focus on its economic overhauls rather than rely on fragile and tenuous links to markets, the EU official said. Greece faces a 12 billion-euro ($16 billion) financing gap in 2015 before taking into account money raised in possible bond sales.

Market Access

To avoid another bailout, Greece aims to jump start its newly regained financial-market access. The government plans to sell up to 3 billion euros in three-year bonds, a Greek government official said last week.

While officials debate Greece’s future needs, the troika is drip feeding payments from the aid that’s already been pledged. The euro area released 1 billion euros yesterday as part of its tug-of-war over program milestones.

As the Greek budget approaches the end of its aid program, the troika’s ability to force the government to push through unpopular reforms is dwindling, the EU official said.

Greece must make “swift progress” on the reforms it has promised to unlock the last 1 billion euros in its current aid tranche, said Dutch finance chief Jeroen Dijsselbloem, who heads the group of euro-area ministers. He said Greece has promised to meet those goals by early August.

That would allow IMF and EU officials to start Greece’s fifth and final review in September, with an eye toward wrapping up the program by the end of the year. Technical officials will return to Athens this week to lay the groundwork this month for that next review.

The ECB declined to comment when contacted after the ministers’ meeting.

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