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Greek bailout talks with auditors begin as market to reopen Monday

JUL 31, 201511:50 PM

[ATHENS] Senior EU-IMF auditors on Friday held their first meetings with Greek ministers to finalise a new three-year bailout as the Athens stock market prepares to reopen after being shut down for over a month by the debt crisis.

Greece's main stock exchange in Athens will resume operations on Monday that were halted on June 26 as the crisis-hit government imposed capital controls, a finance ministry source told AFP.

And as the bailout talks got under way, the International Monetary Fund set its terms saying it would only join a "comprehensive" financial rescue programme that included debt relief and economic reforms.

"In order to ensure medium-term sustainability, there is a need for difficult decisions on both sides... difficult decisions in Greece regarding reforms, and difficult decisions among Greece's European partners about debt relief," a senior IMF official said.

The European Union agreed that this position was "fully compatible" with its own agenda on a Greek bailout that could be worth up to 86 billion euros.

The EU aims to conclude negotiations for a third bailout "with the expertise of the IMF, and then to consider debt measures later in the year," said European Commission spokeswoman Mina Andreeva.

In Athens, the heads of the audit mission met with the Greek ministers of finance and economy with the talks focusing on bank recapitalisation, privatisations and fiscal targets, the finance ministry said.

"There was convergence on some issues, less on others. The discussion was held in a very good climate and will continue," said Finance Minister Euclid Tsakalotos.

The government hopes to conclude the EU-IMF fiscal audit before August 20, when it is scheduled to repay 3.4 billion euros to the European Central Bank including interest.

Greek Prime Minister Alexis Tsipras faces strong criticism from hardliners in his leftist Syriza party who say that applying the terms of the bailout are a betrayal of Syriza's electoral pledge to end austerity.

Mr Tsipras, who turned 41 this week, is trying to regain control after a damaging mutiny by over 30 lawmakers in response to the austerity measures in the new bailout.

The government had to rely on opposition MPs twice to push the reforms - which include sales tax hikes, a pension overhaul and privatisations - through parliament this month.

Syriza will hold an emergency congress in September to determine whether the party continues to support government policy on the bailout.

Also Friday, Mr Tsipras in parliament defended Syriza member and former finance minister Yanis Varoufakis, who has been hit with a flurry of lawsuits over his role in preparing a contingency plan in the event Greece was forced to leave the euro.

"Of course, I personally gave the order to prepare a team to prepare a defence plan in case of emergency," Mr Tsipras told lawmakers, without going into detail on what the plan entailed.

"If our creditors were preparing a Grexit plan, should we not have prepared our defences?" Mr Tsipras asked, referring to a scenario of Greece possibly exiting the eurozone.

But he insisted that his administration "did not have, and never prepared, plans to take the country out of the euro." Greece's creditors had warned that the country could be expelled from the euro when reform talks broke down at the end of June.

"The Commission is prepared for everything... We have a Grexit scenario, prepared in detail," European Commission head Jean-Claude Juncker had warned on July 8.

An economist with unorthodox ideas about the euro and Greece's debt restructuring, Mr Varoufakis has been served with private lawsuits for allegedly plotting in secret to take the country out of the euro.

The Supreme Court has forwarded the case to parliament, which has the sole power to determine whether Varoufakis, as a government lawmaker and former minister, can be formally charged.

Mr Varoufakis this month told a meeting of hedge fund investors that he had been planning a parallel system of liquidity that could have been converted to a "new" drachma "at the drop of a hat." He added that on his orders, a small team had "hacked" into the tax registry to create duplicate tax codes for millions of Greeks, in preparation for the plan.

Mr Tsipras on Friday said Mr Varoufakis may have made mistakes, but was not liable for prosecution.

"You cannot accuse him of stealing the money of the Greek people or of having a secret plan to crash the country into the rocks," the premier said.

As such, it is unlikely that parliament will authorise formal charges to be brought against Mr Varoufakis.

AFP