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Greece: upgrade by Moody's soured by row with lenders Greece: upgrade by Moody's soured by row with lenders
(about 3 hours later)
A growing spat between Greece and its lenders has taken the shine off the first good report card the debt-laden country has received from an international rating agency in years, amid mounting concerns over Athens's deteriorating relations with the bodies keeping its economy afloat.A growing spat between Greece and its lenders has taken the shine off the first good report card the debt-laden country has received from an international rating agency in years, amid mounting concerns over Athens's deteriorating relations with the bodies keeping its economy afloat.
A two-notch upgrade by Moody's was eclipsed over the weekend by the news that monitors representing the European Union, European Central Bank and International Monetary Fund had put off a planned visit that was due to begin on Monday.A two-notch upgrade by Moody's was eclipsed over the weekend by the news that monitors representing the European Union, European Central Bank and International Monetary Fund had put off a planned visit that was due to begin on Monday.
"We haven't worked things out, we still differ over certain issues," the Greek finance minister Yannis Stournaras told reporters. "There are differences over two or three structural reforms," he said, adding that the fraught negotiations with the organisations would be pushed back another week."We haven't worked things out, we still differ over certain issues," the Greek finance minister Yannis Stournaras told reporters. "There are differences over two or three structural reforms," he said, adding that the fraught negotiations with the organisations would be pushed back another week.
Late on Friday Moody's announced it had rare good news for Greece – it was upgrading its credit rating from C to Caa3 because of improved results in the country's economic adjustment programme. Despite heightened tensions, the move was seen as an immediate boost for prime minister Antonis Samaras's fragile coalition government that pledged to return to international capital markets next year. On Friday, Moody's announced it had rare good news for Greece – it was upgrading its credit rating from C to Caa3 because of improved results in the country's economic adjustment programme. Despite heightened tensions, the move was seen as an immediate boost for prime minister Antonis Samaras's fragile coalition government, which has pledged to return to international capital markets next year.
"Moody's expects that the government will achieve (and possibly outperform) its target of a primary balance in 2013, and record a surplus in 2014 in accordance with the adjustment programme," the agency said. "Based on the government's budget execution record up until October, Moody's believes that [its] deficit target is likely to be within reach.""Moody's expects that the government will achieve (and possibly outperform) its target of a primary balance in 2013, and record a surplus in 2014 in accordance with the adjustment programme," the agency said. "Based on the government's budget execution record up until October, Moody's believes that [its] deficit target is likely to be within reach."
Greece was forced to seek bailout aid from its "troika" of lenders after a series of credit agency downgrades plunged the nation into its worst economic crisis in modern times. Since narrowly surviving bankruptcy in May 2010, Athens has existed on rescue funds drawn down from a 240 bn euro financial assistance package, the largest in global history.Greece was forced to seek bailout aid from its "troika" of lenders after a series of credit agency downgrades plunged the nation into its worst economic crisis in modern times. Since narrowly surviving bankruptcy in May 2010, Athens has existed on rescue funds drawn down from a 240 bn euro financial assistance package, the largest in global history.
Despite pulling off the biggest fiscal consolidation of any OECD country – relentless austerity has ensured the country's budget deficit has dropped from over 15% to 3% – Athens is once again at loggerheads with its troika of lenders over cost-cutting reforms and a looming fiscal gap. Despite pulling off the biggest fiscal consolidation of any OECD country – relentless austerity has reduced the country's budget deficit from over 15% to 3% – Athens is once again at loggerheads with its troika of lenders over cost-cutting reforms and a looming fiscal gap.
The lenders' decision to postpone their review – upon which Greece's next €1bn (£0.83bn) tranche in aid now hangs – not only heightens tensions with the government, in a week when parliament begins debating next year's controversial budget, but will almost certainly delay discussion over how to plug the budget black hole. The creditors' decision to postpone their review – upon which Greece's next €1bn (£0.83bn) tranche in aid now hangs – not only heightens tensions with the government, in a week when parliament begins debating next year's budget, but will almost certainly delay discussion over how to plug the budget black hole.
Athens is keen to wrap up the talks by the time it assumes the rotating EU presidency in January. The government is keen to wrap up the talks by the time it assumes the rotating EU presidency in January.
But in an increasingly frenzied political environment – with lawmakers openly threatening to break ranks if called upon to pass yet more belt-tightening measures – officials also admit that relations with lenders have hit rock bottom.But in an increasingly frenzied political environment – with lawmakers openly threatening to break ranks if called upon to pass yet more belt-tightening measures – officials also admit that relations with lenders have hit rock bottom.
In addition to pressing ahead with mass layoffs in the public sector, the troika organisations are demanding reforms in the real estate market – widely perceived as one of the biggest drains on the banking system and lifeless economy.In addition to pressing ahead with mass layoffs in the public sector, the troika organisations are demanding reforms in the real estate market – widely perceived as one of the biggest drains on the banking system and lifeless economy.
"There is a sense that the troika is being far too dogmatic and has simply become unreasonable," said a banker under anonymity. "It is almost as if they are pushing reforms for the sake of reforms when they know they will never be able to pass.""There is a sense that the troika is being far too dogmatic and has simply become unreasonable," said a banker under anonymity. "It is almost as if they are pushing reforms for the sake of reforms when they know they will never be able to pass."
Escalating pressure on the government to lift a ban on home foreclosures and pass a new unified property tax which will see farmers being levied on their land holdings for the first time, has driven a wedge between Samaras and the socialist Pasok party, his junior party.Escalating pressure on the government to lift a ban on home foreclosures and pass a new unified property tax which will see farmers being levied on their land holdings for the first time, has driven a wedge between Samaras and the socialist Pasok party, his junior party.
The socialists are staunchly opposed to the measures with the party's leader and deputy prime minister. Evangelos Venizelos, openly signaling that the government will fall if pushed too far.The socialists are staunchly opposed to the measures with the party's leader and deputy prime minister. Evangelos Venizelos, openly signaling that the government will fall if pushed too far.
"If they want us fall then it is better to fall now," Venizelos was quoted as saying by the Greek media as news outlets traditionally aligned with the troika's views turned against the lenders for being increasingly over-weaning."If they want us fall then it is better to fall now," Venizelos was quoted as saying by the Greek media as news outlets traditionally aligned with the troika's views turned against the lenders for being increasingly over-weaning.
With a wafer-thin majority of just four in the 300-seat parliament the spat has once again spawned growing speculation over Greece's political stability.With a wafer-thin majority of just four in the 300-seat parliament the spat has once again spawned growing speculation over Greece's political stability.
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