Gov’t has its work cut out on second bailout review


TAGS: Finance

There are four main pillars to the 33 milestones Greece needs to implement in order to complete the second bailout review. These concern changes to labor relations, the completion of the midterm program, speeding up privatizations and improving business sentiment. The government’s aim is for the negotiation (the review, debt restructuring and the role of the International Monetary Fund) to be split into two stages and be wrapped up by the end of the year.

The first stage starts on October 16, when the creditors’ top representatives arrive in Athens, and runs to November 7, when the Eurogroup convenes. Athens wants to tie up all loose ends in the second review within these three weeks. If it meets this ambitious target, there will a one-month period during which debt measures will be formulated and the IMF’s role in the Greek program determined. The Eurogroup will meet for the last time this year on December 5 and Athens would like to have all pending issues closed by then.

The first step concerning the second bailout review requires the completion of 33 prior actions. The first pillar is the ratification midterm plan, including the financing of the Solidarity Social Income and the primary surplus targets after 2018.

Changes to labor relations must follow, in alignment with the best practices in the European Union on group lay-offs, collective contract bargaining and union legislation. Athens must also legislate the new social benefits system.

The business climate is the next area up for improvement via the liberalization of closed-shop professions such as civil engineers, the adoption of legislation on licensing, the implementation of one-stop services for companies, as well as other measures concerning competitiveness, investment, licensing, red tape, etc. Interventions in the energy market must also be completed.

On the front of privatizations, the government must agree with its creditors on determining which real estate assets and utilities will be transferred to the new fund. Existing sell-of fund TAIPED must assess the remaining airports and ports in its portfolio and transfer those that it will not utilize to the new fund.