Clock tick­ing for re­view de­ci­sion

Greece and lenders re­main apart on sev­eral is­sues as Athens seeks progress by March 20 Eurogroup

Kathimerini English - - Front Page -

Prime Min­is­ter Alexis Tsipras finds him­self trapped be­tween the pres­sure be­ing ex­erted on the Greek econ­omy by the drawn-out ne­go­ti­a­tions over the sec­ond re­view and the po­lit­i­cal cost of a painful com­pro­mise with the coun­try’s lenders.

It has be­come clear to the pre­mier and his ad­vis­ers, es­pe­cially af­ter the gross do­mes­tic prod­uct data pub­lished last week, that the longer the re­view drags on, the less the chances of a strong eco­nomic re­cov­ery this year.

At the same time, though, the prime min­is­ter is aware that there are sev­eral is­sue on the ne­go­ti­at­ing ta­ble that he is not in a po­si­tion to ac- cept be­cause of the lack of sup­port from his party and MPs in par­tic­u­lar.

The gov­ern­ment has yet to agree with the in­sti­tu­tions the ex­act vol­ume of ex­tra fis­cal mea­sures it will have to adopt. Dis­cus­sions have cen­tered on 2 per­cent of GDP, or 3.6 bil­lion euros, in new in­ter­ven­tions but Athens is hop­ing to bring that num­ber down, es­pe­cially given the strong fis­cal per­for­mance last year. There is an agree­ment that one of the new fis­cal mea­sures will be the re­duc­tion of the tax-free thresh­old for per­sonal in­comes, which is due to be brought down to 5,900 euros from 2019, and will ac­count for 1 per­cent of GDP. How­ever, there is a dis­agree­ment over the re­duc­tion in pen­sion spend­ing. The In­ter­na­tional Mone­tary Fund is push­ing for 1 per­cent of GDP to be lopped off ex­pen­di­ture in one go in 2020, whereas Athens wants to spread the re­duc­tion over sev­eral years. The fis­cal coun­ter­mea­sures that Greece will be able to im­ple­ment if the pri­mary sur­plus tar­get is met also have not been agreed. The gov­ern­ment’s pro­pos­als in­clude a 15 per­cent re­duc­tion in the ENFIA prop­erty tax, a 2-point cut to the cor­po­rate tax rate and the low­er­ing of the sol­i­dar­ity tax.

The big­gest gap, how­ever, is on the is­sue of la­bor re­forms. The IMF does not want any changes made to la­bor leg­is­la­tion even though the gov­ern­ment is keen to bring back col­lec­tive bar­gain­ing across the board. The Fund does how­ever want changes to the laws gov­ern­ing strike ac­tion. It also wants com­pa­nies to be able to make de­ci­sions on mass dis­missals with­out the in­ter­ven­tion of the La­bor Min­istry. A Greek gov­ern­ment of­fi­cial who is tak­ing part in the ne­go­ti­a­tions said the coali­tion’s goal is for there to be only a cou­ple of un­re­solved is­sues by March 20, when eu­ro­zone fi­nance min­is­ters meet.

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