Greece heads for new EU-IMF audit, hopes reforms will earn loans

A new EU-IMF audit of Greek fiscal performance and reforms begins Sunday, with the debt-laden country hoping progress in reining in spending will unlock further bailout loans. The mission chiefs of the so-called troika of creditors -- the EU, IMF and the European Central Bank -- will begin the inspection with a meeting with Finance Minister Yiannis Stournaras. Expected to end in October, the audit will determine the release of a scheduled loan instalment of 1.0 billion euros ($1.33 billion) from Greece's ongoing EU-IMF bailout. In contrast with prior troika visits, Greece has made fiscal progress and recently announced a tentative primary surplus in the budget. This could enable the Greek government to claim additional help for its recession-help economy from its European peers later this year. A primary surplus is a state budget surplus excluding the cost of servicing debts. The recession also seems to be easing, and there was a slight dip in unemployment rate due to seasonal tourism industry hirings. "The signs of recovery are becoming clear," Stournaras told a conference this past week. "No other country has achieved such a large (fiscal) adjustment in peacetime," he said. The inspection comes during a period of heightened labour unrest and political tension after the murder of an anti-fascist musician by an alleged member of the neo-Nazi party Golden Dawn this past week. The country is also grappling with an ongoing wave of strikes against a sweeping redeployment scheme in the civil service which the government says will maximise efficiency. The unions counter that the move is merely designed to meet layoff quotas imposed by the international creditors. Greek school teachers are on indefinite strike over the measure, state-employed doctors have also mobilised and civil servants staged a two-day walkout, later pledging to maintain resistance to the redeployment scheme. Greece is due to move or temporarily cut the salaries of a total of 25,000 civil servants and axe 4,000 state jobs by the end of the year. The auditors will also scrutinise efforts to privatise three ailing companies -- miner LARKO, truck manufacturer ELVO and defence contractor EAS -- and the drafting of a new property tax. The audit is expected to break for the IMF's three-day annual meetings on October 11-13 and a Eurogroup meeting on October 13 and then resume. After a meeting with Greek Prime Minister Antonis Samaras on Tuesday, European Commission President Jose Manuel Barroso said that there was "light at the end of the tunnel," with twice-bailed out Greece set to return to growth next year. Greece has received two EU-IMF aid packages worth 240 billion euros since 2010 in a bailout plan that will wind down next year. But there is now widespread acceptance that it will need a third rescue package, probably amounting to 10 billion euros ($13.3 billion). The IMF has forecast that Greece will need 4.4 billion euros in 2014 and another 6.5 billion in 2015. Asked about widespread speculation Athens will need a third rescue, Barroso said "it is no secret we have to look again at Greece's financial needs," estimated by the IMF at another 11 billion euros in 2014 and 2015. Conservative Prime Minister Antonis Samaras, who heads a fragile coalition with the socialists, earlier this week said the Greek economy is likely to need another six years to return to pre-crisis levels.