Government to push troika for concessions as pressure to meet pledges intensifies

Talks between the coalition leaders last week led to them finalizing the requests that Athens will make regarding the easing of adjustment measures when the troika returns to Greece but European officials have warned that if the government does not stick to its pledges it will be forced to agree to a third bailout.

Sources told Kathimerini that the meetings between Prime Minister Antonis Samaras and Deputy Premier Evangelos Venizelos on Thursday and Friday led to an agreement on the key concessions that Greece will ask the troika to make. These are that the government be allowed to reduce the special consumption tax on heating oil, that companies and individuals owing taxes or social security contributions be allowed to pay these amounts in 100 installments and that the solidarity tax, levied on Greeks’ incomes, be reduced.

The troika, however, will also expect Greece to display progress in meeting its commitments. Apart from its fiscal targets, the government will also have to proceed with firing another 6,500 civil servants and evaluating the performance of the rest. The troika is also pushing for a new salary structure in the public sector. Greece’s lenders also expect to see proposals for further reforms to the pension system and the labor market.

There is optimism within the government that the two sides could reach an agreement by the end of November or beginning of December, leading to the fifth review of Greece’s adjustment program being concluded. Apart from triggering the release of another 1.8 billion euros in bailout funds from the eurozone, the conclusion of the review would also pave the way for further debt relief.

A top European Union official, though, told Kathimerini that if there is no agreement before the end of the year, when the current program expires, a third package would have to be agreed in 2015. This might involve a small amount of funding but would definitely include a deal on debt relief, while committing Greece to further reforms and monitoring.

Kathimerini understands that officials in Brussels are already examining a proposal for debt relief that would require Greece to meet targets that would be checked every six or 12 months.