NEWS

Greece to submit tax, pension reforms to conclude bailout review

LEFTERIS PAPADIMAS & RENEE MALTEZOU

TAGS: Economy, Politics

Greece said on Tuesday it would submit pension and tax reform bills to Parliament next week, as it seeks to persuade its international lenders that it is doing enough to receive more aid under a multi-billion euro bailout agreed a year ago.

The latest review of Greece’s progress on the terms of its bailout deal reached last July has dragged on for months, largely due to differences among its lenders over the country’s economic progress and resistance in Athens to unpopular measures.

Earlier on Tuesday, Athens and its lenders adjourned bailout review talks, potentially delaying a crucial cash handout to the debt-stricken nation, and will resume them immediately after this week’s IMF spring meetings.

Athens signed up to a new bailout worth up to 86 billion euros ($98 billion) last year, its third international rescue package since 2010.

A positive review will unlock up to 5 billion euros in bailout aid which Athens needs to repay 3.5 billion euros to the International Monetary Fund and the European Central Bank in July, as well as unpaid domestic bills.

Mission chiefs of EU institutions and the IMF will return to Athens after the April 15-17 IMF meetings in Washington with a view to concluding an agreement later this month.

Finance Minister Euclid Tsakalotos said it was possible euro group finance ministers would meet on April 24 or 25, in addition to another meeting already booked on April 22.

European Union institutions and the IMF are at odds over the primary surplus – the budget balance before debt-servicing costs – that Greece could achieve by 2018. The EU forecasts a balance equivalent to 3.5 percent of national output. The IMF says it will be closer to 1.5 percent of GDP.

The Greeks themselves are split over the depth of pension reforms to implement and regulating non-performing loans, particularly those involving primary home mortgages. Reforms would include lowering tax-free thresholds and recalculating pensions.

"It’s a complicated, multifaceted discussion," said Tsakalotos. "There are a lot of players and they don’t always agree among themselves. That creates some difficulties."

"We know, for instance, and Mrs [Christine] Lagarde says, so, that she wants a substantial intervention on the issue of debt. You know that some [EU member] states don’t want it," he said.

German finance minister Wolfgang Schaeuble told Reuters in an interview on Tuesday that he currently saw "no need" for Greek debt restructuring.

The money Greece currently owes – without taking into account the new 86 billion euros in aid signed up to last year – would see its interest payments alone spiking to 24.4 billion euros in 2022.

[Reuters]

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