Greece is facing another bailout standoff with its creditors amid reports that eurozone countries will refuse to release additional funds to it this month.
Athens has frustrated its peers in the single currency by implementing only two of the 15 reforms that were a condition of last year’s rescue package. EU officials told German daily Handelsblatt that Greece has delayed privatising state assets, adding to the frustrations of eurozone finance ministers who will discuss progress on Friday.
Further funds are due to be disbursed under the European Stability Mechanism (ESM), which will give Greece up to €86bn (£72bn) of financial assistance by 2018 in return for reforms.
After approving a first tranche of €10.3bn this spring, of which €7.5bn has so far been released, the 19 finance ministers are due to disburse the rest this month but might withhold payment for the rest of the year. A further finance ministers’ meeting is planned for 21 September.
The gridlock report came after the head of the ESM said at the weekend that Greece should be able to secure at least short-term debt relief measures but only if it began implementing the remaining reforms.
“We have been working on these measures and they could be implemented very soon,” Klaus Regling told Greek newspaper Ta Nea.
“We hope the government implements remaining prior actions very soon,” he added. EU officials are demanding that Athens pushes on with plans to set up a new privatisation fund, sell specific state assets, and reform its civil service.
Eight years into the country’s financial crisis, life has become harder for most Greeks. Unemployment is the highest in Europe and one survey in June found that extreme poverty had risen from 2.2% of the population in 2009 to 15% – a total of 1.6 million people – last year.
Longer-term relief to help the country reduce its crippling debt of 176% of GDP will not follow until after the end of the bailout, Regling said. However, the International Monetary Fund – which is not participating in Greece’s third rescue programme – has insisted that long-term relief including debt forgiveness must happen sooner.
The Greek finance minister, Euclid Tsakalotos, warned last week that the country’s next aid payout may be delayed because the government had failed to qualify for it, although he insisted any hold-up would last “for days, not weeks”.
Greek media said Athens faced a monumental task to push through the highly unpopular reforms and secure the last “desperately needed” €2.8bn of funding, followed by the start of long-promised debt restructuring talks by the end of the year.
The government is counting on the talks as a consolation prize to offset a hugely unpopular austerity package including spending cuts, tax hikes and pension reductions required by the bailout, the newspaper Kathimerini said.
It added that the noises emanating from Brussels “speak volumes about eurozone countries’ confidence levels” in the Greek government, while hampering the ability of the prime minister, Alexis Tsipras, to announce even modest measures to help people worst affected by Greece’s prolonged economic crisis.
