The 5th installment will be delayed

The possibility that Greece might not receive the fifth tranche is more than visible for the economy team of the government. The pressure from the auditors has reached its limit and they seem to be recognizing that the problem has moved beyond their powers, transferring it to the political leaders.

To avoid the worsτ, today Giorgos Papakonstantinou will attend the Eurogroup and Ecofin meetings in order to alleviate the concerns of our European partners and convince them that the assistance to Greece should be continued and strengthened, paving the ground for the crucial summit of EU leaders on 24-25 June.

For this reason, the ongoing bazaar with the Troika leaders will stop for today and tomorrow, until the return of Giorgos Papakonstantinou to his Athens office on Wednesday.

But the negative turn of events in the development of the economic program assessment, the “red card” for zero progress, setbacks in the reduction of government deficits, reform and privatization, as well as the political and economic liquidity prevailing in Greece, Germany, France and the IMF itself (after the negative publicity that has accumulated around Strauss-Kahn), all have tied the hands of the envoys, who are placing the responsibility for most of the decisions in the hands of their political bosses.

Talking to protothema.gr, a senior representative of the Finance ministry did not exclude the possibility of “freezing” the fifth loan installment, which would normally be released in June. However, he expressed his optimism that it might be issued with a one -or two-week delay, in early July, and after the go-ahead of the EU summit.  

As it appears, it will be a new deal from scratch for the whole memorandum and will be combined with a new Greek request for an additional loan to meet the needs of the 2012-2013 period, which the country will not be able to cover with direct borrowing from the markets that will remain closed for Greece – as already confirmed by Eurogroup chairman Jean-Claude Juncker and European Commissioner Olli Rehn.

This prospect has alarmed the government, which will have to be very careful with the management of the limited cash reserves of the state (estimated at 12 billion euros approximately), in order to avoid problems with salaries and pensions. The country's borrowing needs for July are estimated at around 14 billion, and might be marginally covered by issuing new treasury bills of 3-4 billion euros.