EUROGROUP President Jean-Claude Juncker is in Athens for talks with Greek Prime Minister Antonis Samaras on whether the debt-laden country has the will to push through unpopular reforms.
Samaras is under pressure to convince European leaders that Greece has finally mustered the political courage to fulfill pledges under its latest bailout.
Juncker has already bluntly told Samaras that Greece must carry out promised cuts and that little room for leeway exists.
The new Greek government wants a two-year extension to the terms of its second €130bn bailout.
However, if that delay involves more money then there will be little sympathy among creditor countries.
The Netherlands is facing a general election in just over three weeks’ time and eurosceptic parties are expected to poll strongly.
Greece already has to find 11.5bn euros in cuts over the next two years in order to meet the terms of the second bailout.
It has been reported that that figure will rise to 13.5bn euros in order to take account of the effect of the austerity measures on the economy and on tax receipts.
Samaras and his moderate leftist and Socialist allies have broadly agreed on the measures, but the government is still struggling to nail down the final cuts amid protests over plans to slash pensions and put civil servants in a so-called labour reserve before laying them off.
‘We are trying to find the best possible mix and a fair distribution of pensions. We also have to protect those getting very low pensions,’ a finance ministry official said. ‘A second issue we continue to work on is the labour reserve.’
The measures will be presented for approval to the troika of European Union, European Central Bank and International Monetary Fund lenders due back in Athens early next month for a final verdict on whether to keep money flowing to Greece.
Samaras will also press the case for an extension to the programme when he meets German Chancellor Angela Merkel in Berlin today and when he meets French President Francois Hollande on Saturday.
Meanwhile in Ireland, The Central Bank has reported that more than 25% of loan and overdraft applications from small business were rejected in recent months. That compared to one in 28 in Germany. The banks are not lending!
The report also found that Ireland has the eurozone’s second highest rate of discouraged business borrowers. Again the banks are consolidating themselves with the public money that has been pumped into them!
The Central Bank economists recommend that steps must be taken to improve perceptions of lending institutions among potential borrowers to encourage lending.
Again, changes in terms and conditions of bank credit, including interest rates, collateral requirements and the size of available loans, in Ireland are also among the least favourable in the eurozone, the study showed.
The Central Bank report also said that on the demand side, Irish credit demand is at or close to the eurozone average.
The research showed that the volume of loans outstanding to SMEs (small- and medium-size enterprises) by March of this year had decreased to 2005 levels.
Gross new lending to SMEs amounted to 407m euros in the first quarter of 2012, down 29.6% from the fourth quarter of 2011 and down over 700m euros from the fourth quarter of 2010.
The Irish Bankers Federation (IBA) said the report flies in the face of recent wisdom.
One of the authors of the report said the study definitively shows Ireland to be one of the toughest places in the euro area for small businesses to get a loan.
He rejected criticism of the report from the Irish Banking Federation, which said the only definitive report on lending was the government-commissioned Mazars report, which said that banks were meeting the demand for loan applications from small businesses.
On RTE’s News at One, Central Bank economist Fergal McCann said his study uses the Mazars report, alongside a ECB/European Commission (SAFE) survey to give a more accurate picture of the situation.
McCann said regardless of which set of figures you use, Ireland ranks second only to Greece in the number of rejections for loans to small business.
‘What we see definitively, regardless of whether we use the Mazars or the SAFE surveys, is that on the supply side, Ireland does appear to be one of the toughest environments in the euro area, whereas on the demand side, Irish firms appear to be looking for finance at something like a regularity that is similar to the European average,’ he said.
He rejected claims by the IBF that the survey was ‘populist spin’.
‘The Central Bank is an independent institution. All we have done in this report is place Ireland in a ranking of European countries using two useful and valuable date sources and trying to come up with as consistent a view as possible. And spinning doesn’t come into it whatsoever,’ he added.
Allied Irish Bank (AIB) has issued a statement saying the bank exceeded its SME lending target of three billion euros in 2011 and is 17% ahead of its year to date target of 3.5 billion euros for 2012.
‘To date, this year AIB has sanctioned 92% of formal applications,’ it added.
However the bank did acknowledge that today’s credit process is more extensive than it was in previous times.
It said it believes this is appropriate and ‘is in no way meant to be an obstacle to obtaining credit’.
ISME (The Irish Small and Medium Enterprises Association) has said the report confirms its worst fears. The association has called on the government to immediately demand full and complete disclosure from the bailed-out banks on lending to SMEs.
Chief executive Mark Fielding said bankers are not telling the full story.
‘While Irish banks have been recapitalised with enormous fiscal injections, the truth of the matter is the bailed-out banks are not fixed, rescued bankers continue to utter untruths, banking reform is delayed and banking policy is turning good business bad.
‘These same Irish banks refuse to lend to viable small and medium enterprises,’ he said.
In a statement, the Irish Hotels Federation said Irish hotels continue to face unjustifiable difficulties in accessing appropriate levels of credit from financial institutions.
It says 39% of hoteliers have experienced difficulties accessing standard/normal credit facilities from their banks over the last year according to recent findings from its quarterly industry barometer.
PIBA, the country’s largest group of financial brokers, has called for greater competition in the Irish market.
It says the report on bank lending ‘lifts the cloak of pretence that the banks are willing to lend to anyone other than a chosen few’.
It added that ‘the tragedy is that it has been going on for far too long and indeed worsened in the first quarter of this year over the last quarter of last year.’
l FAI (Football Association of Ireland) boss John Delaney has given staff until Friday to sign up to controversial cost-cutting measures.
The ultimatum was issued to workers in a letter asking that they accept a 10% pay cut from next month and a reduction in their pensions.
It comes despite talks continuing between management and workers.
Seven compulsory redundancies are also on the cards.
Management and employees at the sports body have been locked in a bitter dispute over the contentious proposals following a fall in ticket sales and a hike in borrowing costs due to the redevelopment of Lansdowne Road.
Most FAI staff are administrative and coaching workers on average yearly pay of between 30,000 euros and 40,000 euros.
A 10% pay cut would bring their earnings, which have already been reduced by previous pay cuts, to between 27,000 euros and 36,000 euros.
Delaney has announced that he will take the same pay cut, bringing his salary from 400,000 euros to 360,000 euros.
But he still earns 160,000 euros more than the Prime Minister, and more than the soccer chiefs of Euro 2012 championship winners Spain and runners-up Italy combined.
It is expected that if staff do not agree to the measures, the number of threatened redundancies could increase.
Delaney has asked that the letter be signed and returned on August 24 – three days before the next round of talks was proposed to take place at the Labour Relations Commission (LRC) between trade union Siptu and management.
