Unlike past negotiations between the Greek government and its European creditors, the current round of discussions in Athens might as well be taking place on the moon for all the effect they are having in the currency markets.
The Greek Finance Minister Yannis Stournaras is in talks with representatives of the International Monetary Fund, the ECB and the European Commission, the so-called 'troika' who are studying the government forecast that the bailout loans scheduled for distribution next year will be 500 million euros ($670) short of funding needs.
The Athens government claims that no further budget cuts will be need to close the deficit, but inspectors from the 'troika' have said that the deficit is more than four times the amount cited by Prime Minister Antonis Samaras’ government.
European inspectors first returned to Athens in late September, finished preliminary work and then returned on November 4th.
Since the return of European officials in early November the euro has traded against the dollar between 1.3548 and 1.3296, with today’s high of 1.3549 just above where the currency was on November 4th when the European inspectors arrived in Athens.
Greece has received 240 billion euros ($322 billion) in rescue loans and in return has enacted harsh and repeated budget cuts and tax hikes. The economy has been in recession for six years, GDP has declined 23 percent and unemployment is over 27 percent. Wages will by next year have dropped by more than 20 percent. GDP shrank by 3 percent in the third quarter over the year, easing from the 3.7 percent decline in the previous quarter.
Greek sovereign debt will reach 179 percent of GDP this year. It has promised to bring the debt down to 124 percent of output by 2020.
Samaras, whose government survived a no-confidence vote on November 11th, saw its majority reduced to just four, is projecting positive economic growth in 2014, the first time since 2007.
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