ATHENS, Greece (AP) — Greek authorities, in a bid to prevent a potentially disastrous default, will try to convince international creditors on Tuesday that their debt-ridden country will meet the strict budget targets required to keep getting rescue loans.
Markets are fairly hopeful that Greece will receive the next €8 billion ($10.9 billion) installment of its bailout, without which the country would go bankrupt next month, plunging Europe’s banking system into turmoil.
The talks will be held by teleconference between Finance Minister Evangelos Venizelos and officials from the European Commission, International Monetary Fund and European Central Bank, collectively known as the troika.
Though stocks were up on expectations some deal would be struck, most analysts think the country will have to restructure its debts at some point, especially if the economy remains mired in recession. Fitch Ratings said in a report Tuesday that it expected Greece to eventually default, but to do so while remaining in the eurozone.
Some experts believe the country will have to drop out of the 17-nation euro, a notion Venizelos dismissed.
"Greece’s participation in the eurozone and the euro is an irrevocable and fundamental national choice that the Greek population is making sacrifices to safeguard, in full knowledge of how priceless it is," Venizelos told journalists, rejecting a Greek newspaper report that the government was considering a referendum on the issue.
German Chancellor Angela Merkel has likewise had to quell fears of a euro break-up, a scenario elected officials in her own government speculated about last week, roiling financial markets.
Prime Minister George Papandreou plans to meet Merkel next week during a visit to Berlin, a German government official said. The official, who spoke on condition of anonymity because the meeting hasn’t yet been announced officially, said the two would talk on the sidelines of the Federation of German Industries’ annual meeting on Sept. 27.
Since May 2010, Greece has been dependent on a €110 billion ($150 billion) bailout from other eurozone countries and the IMF to continue servicing its debt and to pay salaries and pensions. Without the next installment, the country only has enough funds to see it through mid-October.
The funds had been expected in September, but the country’s creditors have said a decision on whether to disburse the funds will not be made until early October.
A first teleconference between Venizelos and the troika Monday night was "productive and substantive," the Finance Ministry said.
Inspectors from the IMF, ECB and Commission suspended their quarterly review of the country’s progress earlier this month, amid talk of missed targets and delayed implementation of reforms.
The Socialist government has already taken a series of austerity measures, cutting public sector pay and pensions and hiking taxes. Unions have responded with strikes and demonstrations.
Hundreds of civil servants demonstrated peacefully in central Athens, while about 250 high school students marched in a separate protest against shortages in schoolbooks and other supplies at state-run schools. Public transport workers have called for a daylong strike Thursday, while air traffic controllers have declared a 24-hour strike Sunday and a four-hour work stoppage on Sept. 28.
Efforts so far have proved to be not enough to tackle the country’s severe debt crisis. In July, European countries agreed to extend a second bailout, worth €109 billion, to Greece. However, the details of the second rescue package, which includes voluntary bond rollovers, have still to be worked out.
On Monday, the IMF representative in Greece, Bob Traa, said Greece needed to speed up its reforms in tax collection and reduce the size of the overmanned public sector.
Ahead of Tuesday’s teleconference, Venizelos was attending a parliamentary committee meeting, at which the director of Greece’s Statistical Authority has been summoned to testify after a member of the outgoing agency’s board claimed budget deficit figures in 2009 were miscalculated, inflating the annual figure. A judicial investigation has been launched into the claims.
"As a result of our actions in the past year, the agency has experienced a strong recovery in confidence regarding its international reputation," Andreas Georgiou, director of the Greek Statistical Authority, said at the committee hearing.
The European Commission’s representative office in Athens issued a statement saying the EU’s statistics agency, Eurostat, had published the reviewed Greek 2009 deficit figures "without reservations" last November.
