Local media report that the Troika resumed monitoring Greek public finances on Wednesday and is supposed to release its assessment by Monday, while the government will have to approve labour market reforms, the 2012 budget draft and the new medium-term fiscal plan. FM Venizelos held a meeting with Administrative Reform Minister Reppas yesterday (Thursday), and there will be an extraordinary Cabinet meeting on Sunday.
We think that while the government is likely to come up with proposals to meet the Troika’s requirements, the challenge will be getting them approved by Parliament thereafter. Ongoing street protests and political divergence within ruling coalition PASOK are likely to make it anything but a trivial exercise. In our view, the approval of labour market reforms (in particular cuts in civil service wages and severe layoffs), changes to closed professions, and privatisations remain key for Greece to receive the sixth tranche of the EU-IMF loan.
PASOK sees internal opposition
A government official was reported as saying “We are satisfied as the talks were held in a positive and creative environment, after the difficult decisions that have been taken and the sacrifices being made by the Greek people.” Meanwhile, two government officials with direct knowledge of the matter said the job cuts were to be discussed at the cabinet meeting, but that the controversial issue was pulled from the agenda after many ministries failed to compile lists of personnel to be cut. The cabinet is to revisit the matter at an extraordinary meeting Sunday, when it also is set to approve the draft 2012 budget.
Street protests increase
Public sector employees blocked the entrance to the Finance Ministry and the Hellenic Statistical Authority (ELSTAT). As a result, the Troika’s inspectors met with FM Venizelos at the deputy prime minister’s office. Public sector workers also staged sit-ins at seven other ministries on Thursday, but decided to leave during the day. Protesters evidently intend to stay at the Finance Ministry until tonight while the sit-in at the ELSTAT building is not seen ending before Sunday.
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