Greece's international debt inspectors have completed their review of the government's reforms, saying Tuesday that if their conclusions are adopted by the eurozone and IMF, Athens is likely to receive the next batch of its bailout loans in early November.
The inspectors from the International Monetary Fund, European Commission and European Central Bank, collectively known as the troika, said Greece's deficit targets for 2011 were "no longer within reach," but that additional measures announced were adequate for 2012.
They said additional measures would likely be needed for 2013-2014, and that they should "focus on the expenditure side."
Greek authorities "continue to make important progress, notably with regard to fiscal consolidation," the troika said in a joint statement.
"To ensure a further reduction in the deficit in a socially acceptable manner and to set the stage for a recovery to take hold, it is essential that the authorities put more emphasis on structural reforms in the public sector and the economy more broadly."
Greece has been dependent since May last year on a 110 billion euro ($150 billion) bailout package from other eurozone countries and the IMF. Without the next 8 billion euro loan installment, the country has said it would run out of funds to pay salaries and pensions in mid-November.
Mired in a recession that is deeper than originally expected, Greece's economy is now only expected to recover from 2013 onwards, the troika said.
"There is no evidence yet of improvement in investor sentiment and the related increase in investments, in part because the reform momentum has not gained the critical mass necessary to begin transforming the investment climate," it said. It noted, however, that exports were rebounding.
The debt inspectors said the Greek government had achieved a "major reduction" in the deficit despite the recession. However, it said, "the achievement of the fiscal target for 2011 is no longer within reach, partly because of a further drop in GDP, but also because of slippages in the implementation of some of the agreed measures."
Additional measures the government recently announced — which include extra taxes and suspending about 30,000 civil servants on partial pay — "should be sufficient to bring the fiscal program back on track and ensure that the deficit target of 14.9 billion euros will be met."
The troika said that delays in the country's privatization effort combined with worse market conditions would lead to "significantly lower" revenue than expected this year, but that the government was still committed to raising euro35 billion through privatizations by the end of 2014.
"Ensuring that the privatisation fund remains independent from political pressures remains key for success in this area," it said.
Once the other eurozone countries and the board of the IMF approve the troika's review, "the next tranche of 8 billion euros ... will become available, most likely, in early November."
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