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Greece expects Eurogroup to approve next aid tranche: officials

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[December 17, 2013]  By Lefteris Papadimas

ATHENS (Reuters)  Greece expects euro zone finance ministers to approve the latest tranche of its multibillion bailout when they meet on Tuesday, Finance Ministry officials said, as foreign lenders wrapped up the latest round of negotiations.

Both sides said they moved closer to a deal on drastically slimming down a money-losing arms manufacturer, a condition to unlock the 1 billion-euro tranche, but fell short of confirming whether an agreement had been reached on Monday.

"There was progress in our discussions," the International Monetary Fund's mission chief for Greece, Poul Thomsen, told reporters after meeting Greek Finance Minister Yannis Stournaras.

Inspectors from the European Union, IMF and European Central Bank "troika" were due to leave Athens on Tuesday and Thomsen said they would return in January.

Greece has been kept afloat by a financial lifeline from the euro zone and the IMF since 2010, with 240 billion euros of loans pledged in exchange for spending cuts and reforms.


Athens was due to receive up to 5.9 billion euros of loans by the end of the year, according to the schedule published by the country's creditors.

However, the remaining 4.9 billion euros is unlikely to come before January, until agreement is reached on other sticking points such as mass firings and lower pension fund contributions for employers.

The latest troika review, which resumed last Wednesday, has been interrupted twice since September due to the reluctance of Greece's austerity-weary coalition government to adopt any more unpopular measures.

The lenders have been pressing Athens to restructure or liquidate loss-making state firms including arms manufacturer Hellenic Defence Systems (EAS) to cap their drain on the budget.

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"We can't prejudge the Eurogroup's decision on the Defence Systems but we're optimistic that an agreement will be reached and the 1 billion will be disbursed," a senior Greek finance ministry official said.

Athens has resisted a complete shutdown of EAS, which is almost entirely owned by the Greek state.

Greece nearly went bankrupt last year as it struggled to meet its bailout pledges but has no immediate funding needs, easing pressure for a deal between the two sides.

Its next bond payment falls on January 11, when 1.85 billion euros of Greek bonds mature, according to Thomson Reuters data. The following big bond maturities, worth about 9.3 billion euros, fall in May.

"If the 1 billion is disbursed, together with our cash reserves we will be able to cover our needs," the Finance Ministry official said.

(Writing by Karolina Tagaris; editing by Alison Williams)

[ 2013 Thomson Reuters. All rights reserved.]

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