No leeway for Athens till fall

Gov’t must rush to implement 12 prior actions in the coming weeks and has no wiggle room for tax cuts By Prokopis Hatzinikolaou

The election result, albeit adverse, has not led to the destabilization of the government, but Athens has very little room for maneuvering, at least regarding any unilateral measures up to November, when the decisions on its debt will be made. In the meantime it will have to implement all the prior actions required by the revised agreement with its creditors.

“The political clock in Greece will restart in November,” noted a European Union official, stressing that the government should not give in to any urges to backtrack on its obligations to implement reforms or achieve its fiscal targets due to the election result. If it does, it risks missing the chance for a definitive solution that the eurozone will try to grant Greece to lighten its debt, not to mention the financial, political and technical support for the necessary reforms.

Pre-election pledges will apparently remain tucked away for a long time, unless the Finance Ministry finds a way to reduce taxes without putting the fiscal balance at risk. Even the slightest relaxation of the policies to meet the program’s targets must not only come with offsetting measures, but should also have the creditors’ approval.

The ministry will need to move ahead immediately with the implementation of 12 prior actions required for the disbursement of bailout installments adding up to 2 billion euros. This means that as soon as the Parliament reopens, a series of bills and amendments must be tabled and voted through for the next tranche of 1 billion euros to be disbursed in June, with another one of the same amount due in July.

Prior actions include the determination of the second batch of charges to be abolished, the merger of auxiliary social security funds, the reduction of pharmacists’ profit margins and the breakup of Public Power Corporation (PPC) so that its privatization can proceed. The technical experts from the country’s creditors will arrive in Athens next month, while the proper assessment of Greece’s progress will not begin before the end of August.