FINANCE

Creditors put pressure on the government

creditors-put-pressure-on-the-government

Greece’s creditors do not like debts being settled in many installments, as they view it as damaging to the payment culture. Even now, amid the pandemic, sources say the creditors have informed the government of their position ahead of plans concerning tax dues, with the 10th post-bailout assessment process having started on Tuesday on the mission chief level.

For more than 12 months, the coronavirus has pushed aside the various differences between the two sides, and the government has enjoyed a sequence of positive assessments, promoting any reforms the conjuncture allows for. However, as time passes and the end of the pandemic appears to be coming into sight, the creditors’ requirements are returning and new priorities emerging. Therefore, for instance, the eurozone officials are now placing an emphasis on better targeting of the support measures by the government.

Reforms are also starting to regain significance: The creditors are demanding adherence to timetables for the new bankruptcy code that will start applying to individuals from June 1. Sources say they have also raised an issue over the immediate application of the new property rates used for tax purposes (known as “objective values”) for the calculation of the Single Property Tax (ENFIA).

Spending on support measures has already topped 14 billion euros for this year, and is likely to rise even higher. The prime minister’s chief economic adviser, Alex Patelis, said earlier this week that there may also be a program to support the tourism restart, similar to that for food service. Of course the budget will not suffer from the €300 million that such a measure would cost, but rather from the many other costs.

Already the government and the creditors have come to an agreement that this year’s budget deficit will exceed 7% of gross domestic product, against an original estimate for 3.88%; hence the need to better target the support measures, and the reservations about new debt settlements in numerous installments.

The decisions are down to the government, but it is certain Athens will seek the maximum consent from the European institutions. Notably, this assessment will determine the disbursement of €770 million to Athens from eurozone central banks’ earnings from their Greek bond holdings (SMPs and ANFAs).