IMF in­sists on lower thresh­old

Di­js­sel­bloem re­veals ad­di­tional short-term debt-eas­ing mea­sures are ready for 2018 when the pro­gram ends

Kathimerini English - - Focus -

The In­ter­na­tional Mon­e­tary Fund is press­ing for a re­duc­tion of the in­come tax thresh­old in Greece to 5,000 eu­ros per year, while the head of the Eurogroup re­vealed yes­ter­day that some ad­di­tional short-term mea­sures for eas­ing Greece’s debt in 2018 are ready. If the IMF is sat­is­fied with the debt-eas­ing mea­sures it will likely sig­nal its en­try into the bailout pro­gram, pos­si­bly while in­sist­ing on its po­si­tion on the in­come tax thresh­old.

The IMF con­sid­ers that the gov­ern­ment’s tax re­forms have not dealt with the very gen­er­ous tax ex­emp­tions in Greece that al­low more than half of salary work­ers to be ex­empt from pay­ing in­come tax, while in the eu­ro­zone the av­er­age rate of ex­emp­tion stands at 8 per­cent.

The Fund’s pres­sure has gen­er­ated con­cern in the gov­ern­ment in Athens, which fears the Euro­pean cred­i­tors may adopt its tough line on the tax thresh­old. After all, both the Fi­nance Min­istry and the cred­i­tors ac­knowl­edge there is a fis­cal gap for 2018, with the gov­ern­ment try­ing to cover it with­out hav­ing to re­sort to the mea­sures the IMF is ask­ing for.

If the pro­posal (orig­i­nally by the World Bank) for the in­come tax thresh­old to be re­duced to 5,000 eu­ros from 8,636 eu­ros to­day is in­tro­duced, each tax­payer will face an ad­di­tional tax bur­den of 800 eu­ros on av­er­age per year.

Eurogroup chief Jeroen Di­js­sel- bloem yes­ter­day called on Athens to im­ple­ment its com­mit­ments so that the IMF can par­tic­i­pate in the Greek pro­gram, adding that the mea­sures to lighten the Greek debt in 2018 are ready.

The Dutch fi­nance min­is­ter told Bloomberg that the Eurogroup de­cided in May that it would ap­ply some short-term mea­sures to re­duce Greece’s ar­rears. How­ever, he noted, the eu­ro­zone has some ad­di­tional short-term mea­sures ready to use if 1.0546 needed for 2018 when the bailout pro­gram will have been com­pleted.

On the IMF par­tic­i­pa­tion in the pro­gram, Di­js­sel­bloem said that “if and when the Greeks im­ple­ment the terms of the pro­gram... the IMF could con­tinue to par­tic­i­pate” in it. He added that the Fund as well as the eu­ro­zone are wait­ing in the con­text of the sec­ond bailout re­view to see the fur­ther re­forms to take place in Greece on la­bor re­la­tions and pri­va­ti­za­tions.

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