Dissension over Greece’s second bailout is dividing the bodies that make up the troika, the so-called joint commission of the International Monetary Fund, the European Union and the European Central Bank.
While a draft of the report to be issued by the troika on Oct. 24 recommended that monies be paid out as quickly as possible despite what it called “extremely worrying” government debt dynamics, the IMF is digging in its heels in favor of waiting till after a summit meeting of eurozone officials to be held Oct. 23, in case officials come up with a plan to make Athens’ debt levels more sustainable.
Reuters reported that, despite pressure to release its evaluation of Greece’s finances before the meeting, the troika has held off; however, in a draft the joint group said, “The Commission services recommend the sixth disbursement to Greece to take place as soon as possible: as soon as the agreed prior actions on fiscal consolidation, privatization and labor market reform, which were announced by the government, have been legislated.”
It also pointed out that the economic downturn in Greece was considerably worse than expected, meaning growth forecasts for the midterm would likely need downward revision. However, although Greece would not meet its targets in 2011, it was expected to do so in 2012 thanks to additional steps being taken by Athens.