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Chasm between government - lenders

Negotiations between the Greek government and lenders have ground to a halt, once again, under the shadow cast by data on the sinking of the economy released yesterday by ELSTAT.

Within this climate, with the IMF getting angry ... and the Greek side losing bargaining power, representatives of the lenders are expected to leave in the evening, and meet with the EuroWorking Group tomorrow.

The latest data on GDP for 2016, which were published by ELSTAT, yesterday, came at the worst possible situation, disarming the Greek negotiating team, which was attempting to reconcile the irreconcilable with the IMF.

The revised data is undoubtedly a cold shower. The fourth quarter of 2016, compared with the third quarter, was negative at -1.2% instead of +0.4%, which was the initial estimate, but worst of all is that compared to the fourth quarter of 2015 which had been originally been expected positive by 0.3% as estimated ELSTAT, was actually negative by -1.1%! What does this means  is that 2016 ended with no rebound, as originally estimated, but with a marginal decline of 0.05%.

This result complicates the government's argument for two reasons: First, it weakens the technical arguments concerning the positive impact of measures and macroeconomic performance in the coming years. Second, it gives leverage to the IMF to continue to deny all provisional estimates for Greece's performance, while maintaining substantive reservations towards Eurostat methodology.

This development makes even more difficult the anticipated revision of the Fund's projections for the gap of 2019 and therefore the amount of 3.6 billion euros in measures will hardly leave the table. Moreover, the GDP revision poses problems and raises arguments about how and when it will be possible to activate countermeasures, given that the government is trying to convince a mechanism based on estimates rather than valid financial performance .

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