Bloomberg: Troika not sold on Greece’s early Memorandum exit

Bloomberg: Troika not sold on early Memorandum exit

Greece’s creditors are not convinced that the country can survive without financial aid in 2015.

Pavlos Zafiropoulos

Greece’s lenders are insisting that the country remain in tethered to the country’s economic bailout program according to the financial newspaper Bloomberg, citing two officials with knowledge of the matter.

Currently Prime Minister Antonis Samaras is seeking an early exit from the financial assistance program by the end of the year. The government is hoping to escape the onerous conditions demanded by its lenders in exchange for the financial aid. Mr Samaras is also believed to be pushing for an early exit in order to reap the political reward of having ‘ended the Memorandum’.

European financial support of Greece is set to expire at the end of 2014, although the IMF is due to continue to disburse loan tranches in 2015. Mr Samaras has said that the country may forgo these additional loans.

That may help his coalition government stave off early elections in February which will be triggered if Mr Samaras cannot find at least 180 MPs to support the election of a new president of the republic. His governments narrow majority currently stands at 154 in the 300 seat chamber. If early elections are held, the opposition party SYRIZA is projected to win, polling consistently about at least 4 percentage points above New Democracy.

However the troika, according to Bloomberg, remains unconvinced that the country can survive by itself following the tabling of the 2015 draft budget in parliament today.

The budget foresees that the country’s deficit will shrink to 338 million euros in 2015 (0.2% of GDP) and its primary surplus (the budget before interest payments) will rise to 5.42 billion euros in 2015 (2.9% of GDP) from 3.6 billion euros in 2014.

According to the budget, Greece will raise money on international debt markets through the issue of 7 and 10 year bonds and treasury bills. Greece returned to the markets in April after four years of being under economic surveillance due to its fiscal crisis with a successful bond issue.

But according to Bloomberg the troika continues to see the country’s condition as fragile. “Greece’s creditors would prefer to keep some form of credible backstop in case market conditions worsen,” the newspaper writes.

Last week European Central Bank President Mario Draghi also made Mr Samaras’s plans for an early exit more difficult by saying that the country’s banks would only be able to make use of the ECB’s ABS purchase program, designed to increase the liquidity in the market, if the country remained under a program of economic surveillance.

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