Troika raises the fiscal gap to 14 bil. euros

Already the representatives of Greece’s lenders have notified the Finance ministry via email that they now believe the funding gap for 2014-2015 will exceed the 11 billion euros they initially estimated and will reach 14 billion.

As it seems, the auditors will not be bent by the financial successes raised by the government, but are discovering a new pressure range. To circumvent the achievement of a primary surplus, they now bring forth as a problem the feeble state of revenues from privatizations of which would covered part of the State’s borrowing needs, so it can repay its debts over the next two years.


We are going for a “double tranche”

Under these circumstances, and while the election uncertainty in Athens and Europe is looming, the handling for the next tranche of loans and measures to alleviate the State debt becomes increasingly difficult. As time passes and decisions for the tranche are shifted to February or later, the pressure is transferred to the Greek side. The amounts of the installments are growing and what Greece fears most is that in the end we might be talking about a "double tranche", ie 4.9 billion euros it already expects to be approved by the end of 2013 and another 3.9 billion euros from the EU and IMF on the current control from the Troika.

"Yellow Cards" from the lenders

But even before the start of the audit of the first quarter, auditors see weaknesses in the implementation of the privatization program and raise the amount of the financing gap by 2015 over 14 billion euros.

Another problem for the Greek government, in a pre-election period, are the discussions that will begin on the measures the Troika asks to be taken to cover the fiscal gap for the biennium 2014-2015. The economic team is entrenched behind the achievements of 2013, which contradicted the predictions of controllers, but the later deny they can be repeated.

Lenders have placed the bar of the new measures at 6 billion euros, 2 billion for 2014 and another 4 billion in 2015, which are deemed as too excessive by Yannis Stournaras and his staff. The Greek side proposes mostly structural measures amounting to about 1.2 billion euros to cover the gap of 2014, but when the auditors return to Athens they will open the discussion about the gap of 2015 which they estimate at 4 billion euros.

The auditors have not said “yes” for the way the to bridge the gap of 200 million which they say was opened by the unilateral decision of the government to keep the VAT in catering at 13% in 2014 as well.
 
The Greek government appears to have accepted that it will proceed to the reduction of employers' social security contributions by 3.9% this year, which the Troika asks to come in the form of a lump sum and not gradually, until 2016.