Germany is proposing that Greece give up more of its fiscal sovereignty and come under closer economic control, according to a document leaked on Tuesday.
The German Finance Ministry proposals were made public by PASOK officials and made for controversial reading as they called for an escrow account into which Greece’s bailout installments are paid to be transferred to the European Central Bank and for the account to also receive the tax revenues that Greece collects.
“In the last program [for Greece] we introduced mechanisms; we need to strengthen those in the sense of control mechanisms, perhaps also automatic stabilizers,” German Finance Minister Wolfgang Schaeuble said in Berlin on Tuesday in an apparent reference to the proposals.
In February, eurozone finance ministers had agreed that an escrow account should be created to ensure that Greece collected the revenues necessary to cover upcoming debt payments.
According to the German document, Greece would also be obliged to pay all of its primary surplus into the account each month. Should Greece miss its targets and not turn a primary surplus that month, it would have to immediately cut spending to bring the budget on track.
The German proposals also foresees a greater role for the European Commission in overseeing Greece’s borrowing and its implementation of the loan agreement.
As a countermeasure to appease a skeptical Greek public, Germany proposes more growth measures, including the creation of a public investment bank.