June 3 (Bloomberg) -- Greece’s government said a review of the country’s economic progress by the European Union, International Monetary Fund and European Central Bank concluded “positively” today.
Discussions on fiscal plans, state asset sales and structural reforms were held during the review, according to an e-mailed statement from the Athens-based Finance Ministry. These plans will be submitted to Cabinet and then to Parliament in the coming days, it said.
With the fourth progress review complete, EU leaders will now focus on wrapping up a new bailout package to prevent the euro area’s first sovereign default. A year after the rescue that aimed to stop the spread of the debt crisis, Greece remains mired in recession, shut out of financial markets and saddled with the biggest debt load in the euro’s history. Moody’s Investors Service said June 1 that it sees a 50 percent chance of a Greek default.
The EU is considering a new aid package that includes a mix of new loans and Greece speeding asset sales and budget cuts. Holders of Greek bonds may also be asked to voluntarily rollover their debt as a way of shrinking the funding gap. The measures are due to be approved at a summit on June 23-24.
Approval of Greece’s efforts by the EU and IMF is needed to ensure payment of the bailout plan’s next instalment of 12 billion euros, due later this month. The team of inspectors, known as the “troika,” have been reviewing Greece’s progress in meeting the terms of the bailout since May 11.
Greece has vowed to trim the budget gap to 7.5 percent of gross domestic product this year after the shortfall came in at 10.5 percent last year. Fallout from Greece’s crisis led to a surge in bond yields of distressed euro-area nations and Portugal and Ireland have followed in seeking rescues.
Prime Minister George Papandreou’s wage and pension cuts and sales-tax increases in return for the emergency loans from the EU and the IMF have contributed to a slump in demand, with Greece’s economy shrinking an estimated 4.4 percent last year. The European Commission forecasts a 3.5 percent contraction this year, complicating efforts to boost revenue enough to bring down the deficit.
--With assistance from Marcus Bensasson and Maria Petrakis in Athens. Editor: Andrew Davis, Eddie Buckle
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