Greek Government’s Targets to Re-Negotiate Bailout Programme

Posted by in Economy

Greece’s coalition government of Nea Dimocratia, PASOK and Democratic Left published its joint programme aiming to undo some austerity measures. Measures demanded by the Troika of IMF/EU/ECB and have been signed by Samaras in the second bailout agreement.

The ambitious programme aims at tax cuts, extra help for the poor and unemployed, freezing lay-offs in the public sector and more time to cut Greece’s deficit. Some of the targeted measures will be financed  through EU funding and equivalent fiscal measures, said the official document.

The programme calls among others for :

- Decrease of  the 23% Value Added Tax for restaurants/catering and farmers

– Freeze of lay-offs in the bloated public sector

– Extension of unemployment benefit to be paid for two years rather than one. Also unemployment benefit for self-employed.

– Cancellation of emergency property tax and the several property taxes and replacement with a unified ( flat) property tax.

– Gradual increase of tax-free income from 5,000 euro to 8,000 and 10,000 euro to a later point according to social criteria, especially for employees and pensioners.

– Restoration of social injustice (low-pensioners, benefits for families with many children).

– Accelerated payment of 6 billion euros of government debt to suppliers.

– National collective bargain with determination of wages agreement between social partners. Minimum wage (cut by 22% and 35% in February will be revised).

General target: no further cuts in wages and pensions, no additional taxes.

– Recapitalization of the country’s fifth-largest lender, ATEbank – a state-owned agricultural bank.

The government will also ask for two more years, until 2016, to cut its budget deficit to 2.1 percent of national economic output from 9.3 percent in 2011, an extension that would require extra foreign funding.

Greek and international media estimate this funding would be between 16-20 billion euro. A third bailout is inevitable…

The Troika was scheduled to arrive in Athens tomorrow, Monday, after almost two months of absence due to the political instability, see: two rounds of elections. However, it looks as if the Troika has been considering postponing “for a few days” its visit to Athens.

With the designated Finance Minister Rapanos in hospital, and PM Samaras on recovery from eye surgery, Troika most likely will have to wait…

So far the Troika has sent signs of possible extension of the programme however with parallel strict implementation of the austerity measures. How will the Greek government manage to persuade the Troika? Especially when the implementation of MoU has been delayed in the last tow months?

programme sources: in.gr, reuters, wallstreetjournal

 PS I think the next crucial match will be IMF/EU/ECB- Troika vs  Samaras/Venizelos/Kouvelis-Troika