Greek Gov’t under pressure: prior actions vs 2 billion euro bailout tranche

Greek government is under immense pressure as money has run out, and the expected 2-billion-euro bailout tranche has not arrived yet. The Eurozone technocrats, the members of the Euro Working Group are supposed to make their first review of the implementation of the bailout programm and decide today whether Greece fulfills the requirements so that it can receive the loan tranche of 2 billion. But there is a gap between what the EWG thinks and what the Greek gvoernment believes. The Greeks believe that they have fulfilled the prior actions requirements up to 90% but the creditors consider that the bills passed through the palriament cover only 50% of the prerequisites.

The government still holds a lot of hot potatoes in its hands, hot in the sense that if certain measures are implemented it will be confronted with the society, the guilds and the unions. It is a left-wing coalition, after all, considering that guilds and union represent the people, and the the society has to pay more than in earns after six years of austerity. Therefore the government tries to avoid implementing several measures, while the creditors increase the pressure. Foreclosures, V.A.T. in private education and opening of pharmacies ownership are the most disputed issues right now.

According to latest Greek media reports, the government tries to find “equivalent measures” to avoid the 23% Value Added Tax in private education. Yes, the issue has not been solved yet as the creditors seem to have rejected the Government V.A.T. scheme as it will have the consequence of  a huge hole in the state revenues. On the other hand a flat rate of 23% V.A.T. in education will force parents further income cuts and teachers into unemployment.

Another issue of dispute is the ownership status of pharmacies, with pharmasists refusing to accept the opening of their profession. For this reason they launched also a strike since last Monday, a strike that ends today though. With the new status based on OECD tool kit, the onwer of a pharmacy does not have to be a pharmacist in order to open and operate a pharmacy. The guild of Greek pharmacists want to keep the old status of onwership and hinder big chains come to Greece.

As for the foreclosures, the creditors demand that the measure has to be broadened and affect more property onwers without protection of any kind.

The bill for the banks recapitalization is yet to be pushed through the Parliament as wells as some other measures like Energy and taxation issues.

Greek media report of the Finance Ministry plans to deal with the shortage of liquidity, with outstanding debts to amount more than 5 billion euro to suppliers awaiting to be paid and tax payers awaiting tax returns.  The social insurance funds are allegedly borrowing money to be able to pay pensions.

It is considered unlikely that the EWG group will approve the release the 2-billion-euro tranche today. Most possible the decision will be postponed to November 9th, and will be taken at the next eurogroup meeting.

PS sorry for possible typos but auto-correct has disappeared after a pc crash.