“We made very good progress,” Poul Thomsen, head of the IMF’s mission to Greece told reporters yesterday, adding that he hoped talks would be concluded early today, before the Eurogroup meeting of finance ministers.

Finance Minister Yannis Stournaras also said he was optimistic of a deal on Monday morning. The two sides were due to leave Athens yesterday, but could remain in touch to nail down final details, Reuters informs.

Government sources have suggested that the troika is in a position to complete its review of the adjustment programme and allow Eurozone finance ministers to decide later today whether to release another EUR 8.1 billion of bailout funding.

According to Kathimerini, a deal seems to have been clinched after the troika inspectors accepted Administrative Reform Minister Kyriakos Mitsotakis’ plans for completing a labour mobility scheme involving 12,500 civil servants.

However, Mitsotakis had to agree in return that the programme would run for eight months rather than 12. It appears that as a result of agreeing to shorten the duration of the scheme, Mitsotakis will be allowed until the end of September to identify all 12,500 public sector workers who will be transferred to other positions.

“It is sealed, there will not be any more meetings regarding the public sector,” Mitsotakis said on Saturday afternoon. “All that is left is for the Eurogroup to give its approval.”

According to sources, 5,000 of those who will be included in the programme will be local authority employees, including school crossing guards and cleaners. Some 3,500 municipal police officers will also be added. They will undergo an evaluation and for every one that is transferred to the main police force, another three will be dismissed. Another 2,000 employees are to come from the education sector, while ministry personnel will also be added once the restructuring of government departments is completed.

The two sides also appear to have reached an agreement over a supposed funding gap of about EUR 2 billion for this year and next. The Greek government said that it would “claw back” much of the overspending at healthcare provider EOPYY by forcing private clinics that worked with the public organization to accept reduced payments.

There were also reports that the troika agreed to the seasonal reduction of value-added tax in the food service sector from 23 to 13 percent in return for a rise in tax on luxury goods.

The next tranche of international aid for Greece could be split into installments, EU commissioner Olli Rehn said, holding out the prospect of a continued hand-to-mouth existence for Greece that threatens to stifle its economy.

According to media reports, Rehn confirmed what many officials have expressed privately amid growing frustration with Athens’ slow pace of reform, namely, that the tranche could be split into several installments.

The decision likely to be taken at the Eurogroup summit will relate to a EUR 4.3-billion tranche for the first quarter of the year and a EUR 3.3-billion installment slated for the second quarter, though the release of the latter slice will also require a separate positive assessment by the Euro Working Group. The European official emphasized, however, that authorities still have much to do, particularly in the areas of overhauling the public sector and the tax collection system.

Meanwhile, the Center for Planning and Economic Research (KEPE) has indicated that the government’s indecisiveness constitute any half-hearted attempts to deal with the opening of closed professions ineffective, tovima.gr writes.

While some professions have been deregulated to a great extent (chartered surveyors, tax consultants and customs agents), many others remain unchanged or experience further regulation.

KEPE notes that the greatest degree of regulation are the “scientific professions” such as lawyers, mechanics and health practitioners, as well as a few others such as taxi drivers and newspaper retailer.

KEPE suggests in its study that apparent benefits in deregulated professions do not reflect a change in attitude, as much as a

reduction in new professionals.

The report examined the degree of regulation in 90 professions/economic activities affected by the relevant reform laws. As explained in the paper, the degree of regulation is measured both for the regime before and for that after the laws’ implementation and the methodology employed is that of composite regulation indice.

The results of the analysis point to the existence of significant barriers to competition before the reforms and significant changes in the regulatory regime after the application of the relevant laws.

Moreover, the results suggest that occupations characterised by more stringent restrictions before the adoption of the laws tend to be characterised by a comparatively higher intensity of regulations after the laws’ implementation.

Stournaras also met with the leaders of the main opposition parties.

According to Kathimerini sources, Stournaras set out three chief risks that Greece must avoid. The largest risk is of a bank run not only on the Greek branches of Cypriot banks, but also on all Greek banking institutions. Averting such a crisis is crucial to safeguard the recapitalization of Greek banks.

The second risky scenario involves the likely blow to the Greek private sector by the haircut on the capital of Greek businesses operating in Cyprus.

The third risk – that of a worsening climate in the Eurozone – is beyond Greece’s control but would have a negative impact on plans to privatize state assets and draw foreign investment and also on the geopolitical level if Turkey decides to exploit the temporary weakness of Greece and Cyprus.

Finance Minister Yannis Stournaras insisted yesterday that there were no plans to bail in depositors in other countries, as was the case in Cyprus. “The Eurozone is not insecure,” Stournaras said in response to a journalist’s question. “In fact, it was stated clearly at the Eurogroup that the solution chosen applies to Cyprus and not any other country,” Stournaras said, according to the media.

Cyprus is finalising capital control measures to prevent a run on the banks by depositors anxious about their savings after the country agreed a painful rescue package with international lenders, accoridng to Al Jazeera.

Banks are due to reopen on Thursday. European leaders said the deal averted a chaotic national bankruptcy that might have forced Cyprus out of the euro.

New pre-election period that followed May 6 poll intensified the dilemmas and increased the percentages of the two major parties. According to Kathimerini, opinion polls indicate that ND and SYRIZA are running neck and neck for first place, which would grant the winning party extra 50 seats in Parliament. This would be vital for forming a coalition government. Neither party is likely to win an outright majority. PASOK is expected to come in third place, with anti-bailout Independent Greeks, Democratic Left, the Communist Party and Golden Dawn also passing the 3% Parliament threshold.

According to ProtoThema.gr, unpublished polls run by political parties in recent days reflect a thriller situation in the electoral body, as the differences between ND and SYRIZA are within the limit of statistical error, while undecided voters seem exceeding 15%. This fluidity creates a climate of uncertainty before the final outcome of the elections, as most survey companies record a meager lead for ND, while others believe that the social dynamic, if expressed at the ballot box, will give the victory to SYRIZA.

For the international community, the challenge of today’s election is Greece to manage to form a government in the coming days that formulate conditions justifying some hope for the country.

According to Bloomberg, European Union and International Monetary Fund have insisted that the conditions of the EUR 130 billion bailout accord agreed in March must be accepted fully by a new government or funds will be cut off, driving Greece into bankruptcy.

“For the last year, Europe has been faced with a major new challenge. While other parts of the world were moving steadily towards recovery, in the summer of 2011 the Eurozone was hit by the sovereign debt crisis.

This latest crisis is related to the previous crises (financial, then economic and social), which required significant recovery plans from European governments. But the debt crisis was also caused by endogenous factors. In several countries it is the result of years of budget deficits, thus essentially shifting the cost of our current way of life onto future generations. And our collective vigilance has not been sufficient to counter this. In addition, our internal governance mechanisms have been unable to prevent the accumulation of economic imbalances.

All European countries are facing these challenges, even if some are more affected than others. I am of course referring to Greece, to countries that receive international aid, such as Ireland or Portugal, and also to Spain, which is facing a serious crisis in its property sector and in relation to some of its banks.

These doubts about the EU’s ability to overcome the crisis, in Greece and elsewhere, have led to gloomier prospects: growth in the euro zone is expected to be only 0.9% in 2013, compared to 2.6% here in Canada. Those are the facts.

Faced with this challenge, and contrary to what I sometimes read, the EU has not stood idly by.

We have taken the necessary urgent decisions. For example by showing our solidarity with Greece. The two successive rescue packages, which we adopted are for a total of EUR 240 billion, and the private sector has also provided almost EUR 100 billion.

It is now up to the Greek people to decide their fate at the elections on 17 June. Never before has so much been asked of Greece, but I firmly believe that by choosing Europe it will get back on its feet.

The programmes under way in Portugal and Ireland are starting to yield results. In addition, all European countries have made valiant efforts to reduce their deficits – across the EU, deficits have been declining for two years and are expected to fall from 4.5% in 2011 to 3.5% of GDP in 2012 – and undertake structural reforms.”

Spanish bank shares leapt almost six per cent on Monday morning on their first day of trade following the deal to recapitalise the country’s struggling lenders, with Madrid’s IBEX 35 benchmark index rising to 6,929.9 points in early morning trading, Al Jazeera reported.

London’s FTSE 100 index jumped 1.80 per cent to 5,532.92 points, Frankfurt’s DAX 30 rose 2.04 per cent to 6,255.65 points and in Paris the CAC 40 rose 1.98 per cent to 3,110.96 points as investors jumped into financial shares in the opening deals.

The move came after weeks of increasing concern that bad loans at Spain’s lenders might overwhelm public finances. The dollar and yen fell on decreased demand for refuge assets as shares rallied, according to Bloomberg.

The euro rose nearly one per cent to $1.26694 on Monday, its highest level since May 23, according to Reuters.

The rise comes after a bailout package was agreed at the weekend, which Spanish economy minister Luis de Guindos stressed that it was not a rescue but a loan that imposed restrictions only on the country’s banks.

Mariano Rajoy, the Spanish prime minister, said on Sunday that the eurozone deal had secured Spain a “line of credit” for the country’s debt-stricken banks that would ensure the “credibility of the euro”.

Olli Rehn, the EU Economic Affairs Commissioner, said the Spain deal was critical to reassure jittery markets.

Spain’s economy is twice the size of the other bailed-out countries combined.

This will happen due to the cancellation of significant financial assistance provided to the country and will lead the Greek banking system to exit the European System of Central Banks and to a monetary (inflationary) financing of Greece’s increasing budget deficits. In particular, if Greece resorts to this action and cancels the Memorandum and the second loan agreement, and most importantly, if we leave the programme of fiscal adjustment and reform, then we lose the important aid given to the country, which, as noted, is the highest financial aid ever been offered to a country in world history.

In this case, the country will be forced to “disorderly bankruptcy” and the Greek people will bear the entire cost of dissolution of the basic institutions of the economy and the cost of exit from a crisis that will be prolonged even more, acquiring much more dimensions.