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Greek Government’s Targets to Re-Negotiate Bailout Programme

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:, reuters, wallstreetjournal

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

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  1. They can’t just present a list of demands to go easy like this, to get agreement, (let’s be straight that means “to sell it to the German taxpayer”) they will have to OFFER something too – a massive acceleration of things like privatisation, improved tax collection and liberalisation of the professions, real “action this day” with no debate.

  2. Political posturing more than likely. I would be very surprised if the troika accepted the majority of these terms. A decrease in VAT is welcome, but the other stuff seems highly unlikely. Didn’t they also request the lifting of immunity for MPs?

  3. On the above proposals.

    Reduce the VAT is a must. Say to around 15%.

    Freeze on lay offs in public sector. Not good. Simply reduce the numbers through natural attrition. I am sure there are a few hundred that are ready for pension at age 65 and not at age 50.

    And train the rest to multi task and skill and be sent to where ever they are needed in the country. They are public servants are they not.
    There are enough army bases around the country to include housing for them where ever they are sent. Yes a small area of the army bases should be partitioned for public servants. With a small rent of course paid to the defense budget.

    Unemployment benefits should still be for one year with review for further benefits and a retraining program. And with an option for the unemployed to become self employed thus boosting the private sector.

    A flat property tax yes but not unsustainable to the people.

    Yes to a tax free thresh hold of 8,000 Euros not more.

    Yes to a restoration of social injustice. But also with a means test.

    Yes to a 6 Billion Euro payment to the suppliers to the public infrustructure, but with a review of the invoices with comparisons from competition suppliers. And future orders to be tendered and not given to A or B because they are a relative or good friend. That comes with a bonus to the minister or a bribe to the person who chooses the supplier and places the orders.

    There should be a national minimum wage for all the professions in Greece just like in Australia.

    The Australian National Minimum Wage Order 2012 [PR062012] set the following wages for award/agreement free employees (to take effect in relation to a particular employee from the start of the employee’s first full pay period on or after 1 July 2012):
    • National minimum wage—of $606.40 per week, calculated on the basis of a week of 38 ordinary hours, or $15.96 per hour.

    This is just the Australian National Minimum Salary for a worker.

    Besides this, every profession has a minimum salary, the Food and Beverage industry has its minimum salary per hour.

    The Hairdressing industry has its minimum salary per hour.

    And overtime is paid per hour with a loading working after 7pm of minimum 15% to 25%. Working on weekends with a loading of 25% on Saturday and a loading of 50% working on Sunday. Working on Public Holidays and National Holidays a loading of 100% to 200% per hour.

    Yes to no further cuts in wages and pensions in the private sector at least. But possible in some public sector positions. Especially to supervisors and managers according to their work and responsibilities.

    Not thrilled about recapitalising the banks. Any bank.

    Banks make enough money through fees and interest rates from lenders.

    I should add the government should introduce a Luxury Tax on items considered to be Luxury items, such as a Mercedes Benz or Porsche. Or a 300 Euro toaster. If the rich can afford to buy these Luxury items then they can afford to pay the tax on them to.

  4. keeptalkinggreece

    yes, they also have some plans of parliament, I will post baout tomorrow