Deal reached with lenders on pri­mary bud­get tar­gets for 2015-2018

Financial Mirror (Cyprus) - - FRONT PAGE -

The Greek gov­ern­ment agreed with its cred­i­tors on the pri­mary bud­get tar­gets for 2015-2018, ac­cord­ing to gov­ern­ment sources cited by the Athens News Agency on Tues­day.

An agree­ment should keep the coun­try in the eu­ro­zone and avert bank­ruptcy with an Au­gust 20 de­fault loom­ing.

The two sides agreed on the fol­low­ing tar­gets for the pri­mary bud­get: - in 2015, a pri­mary deficit of -0.25% of GDP; - in 2016, a pri­mary sur­plus of +0.5%; - a pri­mary sur­plus of +1.75% in 2017; and, - a pri­mary sur­plus of +3.5% in 2018. The sources un­der­lined that there would be no new mea­sures in­tro­duced in re­la­tion to fis­cal tar­gets for the years 2015 to 2016.

The meet­ing has now com­pleted a long stretch of 17 hours since it be­gan on Mon­day, with a brief break the same day to up­date the cab­i­net at a meet­ing chaired by Prime Min­is­ter Alexis Tsipras at the gov­ern­ment’s Max­i­mos Palace.

Ac­cord­ing to sources, the two sides have agreed on the ma­jor­ity of is­sues. The pend­ing is­sues cur­rently be­ing dis­cussed in­clude 90 bln eu­ros of non-per­form­ing “red” loans (which will be re­solved af­ter the banks’ stress tests in late Au­gust and their re­cap­i­tal­i­sa­tion by end of the year), a pri­vati­sa­tion fund (which will over­see 50 bln eu­ros of as­sets and will be based in Athens), and the dereg­u­la­tion of the energy mar­ket.

Greece needs to reach an agree­ment on its third bailout by Au­gust 20, when it must re­pay EUR 3.4 bln to the Euro­pean Cen­tral Bank.

“There are is­sues (the cred­i­tors) want to dis­cuss again and again, but I think there should be op­ti­mism that there will be a deal soon... I don’t know if it will be to­mor­row morn­ing, but soon, it will be soon,” Fi­nance Min­ster Eu­clid Tsakalo­tos said.

The talks be­tween Tsakalo­tos, Econ­omy Min­is­ter Gior­gos Stathakis, and the ECB, the In­ter­na­tional Mon­e­tary Fund and the Euro­pean Sta­bil­ity Mech­a­nism aim to fi­nalise the list of new re­forms to be re­quired of the Greek gov­ern­ment in ex­change for a life­line of up to EUR 86 bln.

But Ger­many may stand in the way of a full dis­burse­ment of the third bailout, which comes on top of two ear­lier res­cue pack­ages to­talling EUR 240 bln.

Ap­pear­ing to throw cold wa­ter on the pos­i­tive com­ments from both sides, Ger­man gov­ern­ment spokesman St­ef­fen Seib­ert told re­porters: “The prin­ci­ple speed’ ap­plies here in par­tic­u­lar.”

Ber­lin favours a stop­gap so­lu­tion such as the short-term EU bridg­ing loan of EUR 7 bln that en­abled Greece to meet debt pay­ments to the IMF and ECB in June and July.

Ger­man MP Ralph Brinkhaus, a top of­fi­cial of Chan­cel­lor An­gela Merkel’s CDU party, said ear­lier on Mon­day that such a so­lu­tion would be “bet­ter than a bad agree­ment”.

On the back of ex­pec­ta­tions of an im­mi­nent agree­ment, the Athens stock ex­change on Mon­day jumped 2.06%, its third day of gains af­ter los­ing nearly two thirds it value when it re­opened last week.

Greece and its cred­i­tors are yet to an­nounce a con­sen­sus on other is­sues, in­clud­ing rais­ing a sol­i­dar­ity tax on large in­comes and VAT taxes on pri­vate stud­ies, petrol for farm­ers and beef.

Any de­ci­sion af­fect­ing farm­ers car­ries po­lit­i­cal risk and Tsipras last week promised to ex­tract as many con­ces­sions as pos­si­ble from the cred­i­tors.



On Mon­day, the prime min­is­ter pledged to cut law­mak­ers’ tax breaks and min­is­ters’ salaries in a “sym­bolic” move to ap­pease Greek so­ci­ety.

“When the is­sue of scrap­ping tax breaks for farm­ers falls on the ne­go­ti­at­ing ta­ble, we can­not pre­tend not to care about our own tax breaks,” Tsipras said.

The Greek par­lia­ment may vote on the ac­cord on Thurs­day, af­ter which eu­ro­zone fi­nance min­is­ters could be asked to ap­prove it on Fri­day.

Tsipras, mean­while, is un­der pres­sure from many in his rad­i­cal left Syriza party who say the new ac­cord will pile fur­ther aus­ter­ity on a weak­ened econ­omy and goes against the party’s cam­paign pledges.

But with his pop­u­lar­ity among Greeks still high, Tsipras has warned the dis­si­dents of early elec­tions in the au­tumn if they con­tinue to re­sist the mea­sures.

For­mer energy min­is­ter Pana­gi­o­tis Lafaza­nis, who is op­posed to the new bailout agree­ment, has dis­missed it as “a ne­go­ti­at­ing fi­asco” and said Tsipras could not “avoid the out­cry by re­sort­ing guiltily and hur­riedly to elec­tions”.

Iskra, a web­site of the Lafaza­nis-led Left Plat­form, the anti-euro group in­side Syriza, on Satur­day raised the prospect of snap elec­tions as soon as the first half of Septem­ber.

Quot­ing anony­mous gov­ern­ment sources, the web­site said the plan was to rush the bailout ac­cord through par­lia­ment and then im­me­di­ately call for snap elec­tions in or­der to “purge” MPs who op­pose the new deal.

When cred­i­tors agreed in July to ne­go­ti­ate a deal aimed at keep­ing it afloat and in the euro zone, Greece com­mit­ted to im­ple­ment­ing ma­jor re­forms, such as scrap­ping early re­tire­ment, by the end of Oc­to­ber. Lenders want, for ex­am­ple, an in­crease in the re­tire­ment age to 67 from the nom­i­nal 62 that falls sig­nif­i­cantly depend­ing on the num­ber of years worked and fam­ily sta­tus.

Tech­ni­cal teams also dis­cussed tax, jus­tice and cor­rup­tion is­sues and about set­ting up a new Greek pri­vati­sa­tion fund and about bad loans.

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