(Reuters) - Greece's EU and IMF lenders are leaving Athens after the first round of talks on a crucial bailout review and will return after the results of European bank stress tests are announced, Greek officials said on Tuesday.
The inspectors were expected to leave later this week to attend the International Monetary Fund's annual conference in Washington and return next week, but are now expected back around the start of next month. Finance Minister Gikas Hardouvelis denied the inspectors were leaving because of a disagreement.
Greek newspaper To Vima had earlier reported their departure was due to a failure to agree on any outstanding issues and because of a confidence vote in parliament on Friday.
Prime Minister Antonis Samaras hopes the vote will quell speculation he may be forced to call an early election because he does not have the backing of enough lawmakers to push through a nominee for presidential elections next year.
Athens needs to successfully - and swiftly - conclude its latest bailout review to make good on hopes it can exit the European Union/IMF rescue program at the end of this year, well ahead of its scheduled end in 2016.
Investor jitters about whether Athens will be able to pull off the early exit and the threat of snap elections have pushed up Greek bond yields in recent weeks, with 10-year bond yields rising to 6.8 percent on Tuesday, their highest level in a week.
Samaras's deputy, Foreign Minister Evangelos Venizelos, warned on Tuesday that uncertainty ahead of February's presidential election was undermining the Greek economy as it begins to emerge from its worst economic slump in decades.
"Five years of efforts, five years of hard sacrifices, could be destroyed in five days," Venizelos said in a speech. "Five days are enough to take us back to 2009: budget deficits, no future, the collapse of competitiveness," he said, adding the government was working to end "groundless scenarios" of early elections.
But investors are bracing for a prolonged period of political deadlock. The Athens main stock index .ATG closed down 2.3 percent to hit a one-year low, with traders citing political uncertainty as weighing on the shares.
"Investors do not see any political solution soon. The government is expected to win the confidence vote but this will mean things will be pushed back for another five months," said Takis Zamanis, a trader at Beta Securities.
A second trader, who declined to be named, said investors were worried about political paralysis. Some are also nervous at the prospect of a bailout exit, fearing Greece may loosen its fiscal strings too much once policy supervision ends, raising the chances of another restructuring that would be costly for bondholders.
ON A GOOD PATH
After a meeting with its EU/IMF lenders on Tuesday, a Greek finance ministry official said progress had been made on outstanding issues and the two sides were "on a good path."
The official said the two sides had moved closer to resolving the issue of corporate bad loans, a major sticking point in the negotiations.
Greece's lenders are worried that the excess debt will hold back growth as six years of deep recession, rising taxes and shrinking credit hammered companies. "There is convergence with the lenders (on bad loans)," the official said. "They want an overall solution on the issue."
Bad loans including household and business debt, have hit about 80 billion euros - or nearly half the size of the 182 billion euro economy - and the lenders have pushed Athens to improve its current plans to resolve the issue.
reuters.com
The inspectors were expected to leave later this week to attend the International Monetary Fund's annual conference in Washington and return next week, but are now expected back around the start of next month. Finance Minister Gikas Hardouvelis denied the inspectors were leaving because of a disagreement.
Greek newspaper To Vima had earlier reported their departure was due to a failure to agree on any outstanding issues and because of a confidence vote in parliament on Friday.
Prime Minister Antonis Samaras hopes the vote will quell speculation he may be forced to call an early election because he does not have the backing of enough lawmakers to push through a nominee for presidential elections next year.
Athens needs to successfully - and swiftly - conclude its latest bailout review to make good on hopes it can exit the European Union/IMF rescue program at the end of this year, well ahead of its scheduled end in 2016.
Investor jitters about whether Athens will be able to pull off the early exit and the threat of snap elections have pushed up Greek bond yields in recent weeks, with 10-year bond yields rising to 6.8 percent on Tuesday, their highest level in a week.
Samaras's deputy, Foreign Minister Evangelos Venizelos, warned on Tuesday that uncertainty ahead of February's presidential election was undermining the Greek economy as it begins to emerge from its worst economic slump in decades.
"Five years of efforts, five years of hard sacrifices, could be destroyed in five days," Venizelos said in a speech. "Five days are enough to take us back to 2009: budget deficits, no future, the collapse of competitiveness," he said, adding the government was working to end "groundless scenarios" of early elections.
But investors are bracing for a prolonged period of political deadlock. The Athens main stock index .ATG closed down 2.3 percent to hit a one-year low, with traders citing political uncertainty as weighing on the shares.
"Investors do not see any political solution soon. The government is expected to win the confidence vote but this will mean things will be pushed back for another five months," said Takis Zamanis, a trader at Beta Securities.
A second trader, who declined to be named, said investors were worried about political paralysis. Some are also nervous at the prospect of a bailout exit, fearing Greece may loosen its fiscal strings too much once policy supervision ends, raising the chances of another restructuring that would be costly for bondholders.
ON A GOOD PATH
After a meeting with its EU/IMF lenders on Tuesday, a Greek finance ministry official said progress had been made on outstanding issues and the two sides were "on a good path."
The official said the two sides had moved closer to resolving the issue of corporate bad loans, a major sticking point in the negotiations.
Greece's lenders are worried that the excess debt will hold back growth as six years of deep recession, rising taxes and shrinking credit hammered companies. "There is convergence with the lenders (on bad loans)," the official said. "They want an overall solution on the issue."
Bad loans including household and business debt, have hit about 80 billion euros - or nearly half the size of the 182 billion euro economy - and the lenders have pushed Athens to improve its current plans to resolve the issue.
reuters.com
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