Debt mea­sures to be re­in­stated

Euro Work­ing Group will try to re­sume the stag­nated ne­go­ti­a­tions be­tween Athens and its cred­i­tors

Kathimerini English - - Focus - BY ELENI VARVITSIOTIS

BRUS­SELS – Jan­uary prom­ises to be a tough month for ne­go­ti­a­tions be­tween Athens and Greece’s cred­i­tors, but it is likely to see the un­freez­ing of short-term mea­sures to ease the coun­try’s debt bur­den that were sus­pended last month af­ter the govern­ment’s uni­lat­eral de­ci­sion to of­fer hand­outs to pen­sion­ers.

The Euro Work­ing Group is sched- uled to con­vene on Jan­uary 12, when the cred­i­tors’ rep­re­sen­ta­tives will bring se­nior euro­zone fi­nance min­istry of­fi­cials up to date on the state of ne­go­ti­a­tions with Athens.

With near-zero progress recorded in De­cem­ber, the talks have failed to ad­vance since the last time the cred­i­tors were in the Greek cap­i­tal. On the one hand, there is some dis­tance be­tween the lenders and Athens as re­gards the fis­cal gap that has emerged for 2018 and how it will be cov­ered (i.e. where the govern­ment will de­cide to make fur­ther cuts), and there has been no agree­ment on the la­bor re­la­tions front, due to the lack of progress on col­lec­tive la­bor con­tracts. On the other hand, the di­vide be­tween the euro­zone and the In­ter­na­tional Mon­e­tary Fund on the tar­gets for the pri­mary bud­get sur­pluses has not been nar­rowed, with the Fund in­sist­ing that its par­tic­i­pa­tion in the bailout pro­gram de­pends on Athens tak­ing mea­sures for the pe­riod af­ter the end of the pro­gram (2019 and 2020) in or­der to match the high pri­mary sur­plus of 3.5 per­cent of gross do­mes­tic prod­uct that the euro­zone is de­mand­ing.

The pes­simists in Brus­sels say the nec­es­sary progress on is­sues such as the re­duc­tion of the tax-free ceil­ing (the IMF ar­gues that taxes bur­den only a por­tion of Greek tax­pay­ers) and the fur­ther re­form in the tax sys­tem will not have been achieved 1.0501 by the end of Jan­uary for the cred­i­tors to re­turn to Athens.

As ne­go­ti­a­tions have stag­nated, the Euro Work­ing Group will at­tempt to see the cred­i­tors back in Athens for talks to con­tinue and for some progress to be pre­sented at the Jan­uary 26 Eurogroup meet­ing. What will likely hap­pen is that the Euro­pean Sta­bil­ity Mech­a­nism will re­in­state the short-term debt-eas­ing mea­sures be­fore the Eurogroup meet­ing.

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