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by Euro Reporter
2014-03-24 10:28:31
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Greece reaches deal to release foreign rescue funds

After seven months of faltering negotiations, Prime Minister Antonis Samaras said on Tuesday that Greece had reached a deal with its foreign lenders on economic reforms necessary to unlock billions of euros in crucial rescue funding. He also pledged to distribute 500 million euros to one million Greeks hit hardest by the country’s economic crisis. “The long negotiations with the troika have been completed successfully,” Mr. Samaras said in a televised news conference. “United, the government achieved its mission.” He said his administration would honour a pledge to give a portion of a projected primary surplus — a budget surplus after debt payments — to “recompense the massive sacrifices of the Greek people.” Members of the police and security forces on low salaries would be among the beneficiaries of the immediate delivery of the €500 million, or $695 million.

greece_400Mr. Samaras added that €20 million would go toward covering the needs of the rising number of Greece’s homeless and that the state would repay €2.8 billion in debts to suppliers in the private sector this year, €1 billion more than the amount budgeted. An additional €1 billion would go toward reducing Greece’s debt burden. There was no immediate statement by Greece’s so-called troika of international creditors: the European Commission, the European Central Bank and the International Monetary Fund. But Simon O’Connor, a commission spokesman, said at a Brussels news briefing that policies had been agreed to and that a “technical level agreement” would be completed during the day. The troika’s audit started last September but dragged on because of disagreements over the extent of austerity measures Greece must impose to meet the terms of its international bailout and secure €10 billion in pending rescue loans that Greece needs to pay down bonds that are due to expire in May.

The troika has extended Greece two bailouts worth €240 billion since 2010. Greece and the troika agreed to reduce the social security contributions paid by employers and workers by 3.9 percentage points, a measure aimed at helping struggling businesses and lifting wages, the prime minister said. A series of structural, growth-oriented reforms aimed at increasing competitiveness will also be enforced, Mr. Samaras said, although he did not provide details of those changes. Greece has agreed to various austerity measures like cuts to public sector salaries and pensions as well as tax increases, including a fivefold rise in property taxes. Finance Minister Yannis Stournaras, who has coordinated the talks between the troika and Greek government officials, said the review was the toughest hurdle Greece had cleared since it signed its first loan deal in 2010.

“It has been a very, very difficult seven months — the hardest review yet,” he said at the joint briefing with Mr. Samaras. A crucial point of contention was the size of a projected primary surplus and what should be done with it. Greece puts the surplus at €2.9 billion for this year, but Eurostat, the European Union’s statistical agency, is scheduled to issue an official estimate in April. The Greek government, which is bracing for European Parliament and local elections in May, wanted to give the surplus to austerity-weary citizens. Mr. Samaras hinted last year at such benefits, which foreign auditors are believed to have opposed.

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A lot of pissed-off old people protested in Greece

The Ministry of Health in Athens is about a half mile away from Kotzia Square. It's not a ton of distance for a protest march to cover, but it was plenty yesterday for more than 2,000 Greek retirees angry about the affects Greek austerity measures are having on them. The elderly marchers were demanding affordable healthcare and an end to ever-increasing pension cuts; since 2010, pensions have been slashed 60 percent while taxes have risen. The government is currently considering cutting pensions even further, and may raise the retirement age.

The Greek pension system was a mess even before the country's economic collapse, with cases of fraud reportedly rampant. To deal with the problem, the government has been actively trying to persuade pensioners to show up to a government office and prove that they exist — a tall order for some of the less spry amongst Greece's elderly population. “If I had saved all those [pension payments] in a bank account, I would be rich by now — where has it all gone?” said one 64-year-old man who became homeless in 2011 when his pension was drastically cut, and who now relies on a shelter. “Every day, more and more elderly people arrive at the door asking for help, there are too many to count.”

According to Athens-based NGO Klimaka, of the estimated 20,000 homeless people in Greece today, 14,000 have become homeless in the past two years. Nearly half of the country’s homeless population have children. Civil servants have also been hit hard by austerity measures, and they're also extremely unhappy about it. Over the past couple of years, they've led many of the protests and strikes in Greece, and this week they launched a two-day strike due of the looming 11,500 lay-offs of government employees planned for later this year. About 3,000 civil servants, including teachers and hospital workers, participated and carried banners that read: “We are people, not numbers.” 

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Greece's economic outlook 'stable'

Greece's economy is gradually rebalancing and will grow over the coming three years despite ongoing high debt levels, ratings agency Standard & Poor's believes. The ratings agency today reaffirmed its B-rating on Greece and said the outlook is stable.

Greece's rating is still seven notches below what is considered to be investment grade. Ratings matter because they can affect a country's interest payments. S&P said it believed Greece's exports would continue to grow and that the government's reforms have helped shore up the budget.

And, though it noted the "fluid" political environment in Greece, it said it believed any government would continue to adhere to current policies. Greece has been dependent on international rescue funds since 2010, imposing deep austerity measures in return.


         
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