Coalition eyes tax, debt relief

Creditors said to be mulling idea of lightening load in installments as PM seeks to hasten presidential polls

As troika mission chiefs enter the final stretch of an informal inspection of Greece’s economic reform program, Kathimerini understands that the government is focused on a medium-term plan to introduce tax relief despite creditors’ skepticism and to bring forward the election of a new president to January to ensure that political tensions do not escalate.

In a meeting with troika inspectors over the weekend, Administrative Reform Minister Kyriakos Mitsotakis insisted that Athens would honor pledges to lay off 6,500 civil servants this year and to enforce an intensely unpopular mobility scheme that has prompted prolonged upheaval in the civil service.

Troika envoys are to meet with other ministers in key posts in the coming days before their anticipated departure on Thursday; the envoys are not expected to return to Athens until September when the next official audit of Greece’s finances is due.

In the meantime Greek authorities have their work cut out for them. Athens must push through a second set of six prior actions, including the merging of auxiliary pension funds, to clinch another 1 billion euros in rescue loans and secure the launch of talks on debt relief.

To ensure that Greece does not lose momentum in its reform effort, it is likely that creditors will suggest that the lightening of Greece’s debt burden be done in installments, Kathimerini understands. The idea would be to reward the achievement of reform targets with the partial lightening of debts, sources indicated.

Meanwhile Athens remains keen to avoid a third bailout with sources insisting that a funding gap of 12.6 billion euros can be covered with existing funds – for instance from the money set aside for Greek banks – without the need for further loans that would necessitate additional austerity measures.

Both Prime Minister Antonis Samaras and his coalition partner, PASOK leader Evangelos Venizelos, are said to be convinced that the government must gradually start offering tax breaks and other incentives to austerity-weary Greeks in a bid restore some social justice and to ensure that the coalition does not expend all its political capital. Kathimerini understands that Samaras is aiming to bring forward presidential elections, scheduled for February, by at least a month to avert the escalation of political tensions.