Tax collection, recap and layoff program on the table

Six burning issues remain on the negotiations table in talks between the Finance Ministry and the representatives of the country’s creditors, which will have to be concluded by Wednesday evening ahead of Minister Yannis Stournaras’s departure for Eurogroup and ECOFIN meetings on Thursday and Friday.

No decisions were reached during the meetings the ministry held with the international experts before last night’s crucial meeting of the coalition leaders, although the two sides did review the subjects that remain to be addressed.

The aim is for the assessment report by the representatives of the European Commission, the European Central Bank and the International Monetary Fund – collectively know as the troika – to be completed by July 31 so that the IMF can approve the disbursement of the next installment of 1.8 billion euros on August 1. Otherwise the Fund will not be able to support the Greek program given that there will be a funding gap for the next 12 months. In that case, the eurozone would have to find a way to cover the gap, with the IMF pressuring for a new haircut for the debt in the hands of the official sector.

The first issue on the table concerns the tax mechanism. The troika asked for data to establish whether revenues from tax measures for the second half of the year are certain, especially the property tax paid via electricity bills, which will have certain exemptions and will be 15 percent lower than last year. The reorganization of the tax monitoring and collection mechanisms is also crucial, while the troika also requested details on the new property tax for 2014.

The local banking system’s recapitalization and the progress of privatizations are two other serious issues, but the troika is particularly keen to see details regarding the agreed measures that have not been implemented; this mostly concerns the contribution of 0.1 percent of enterprises’ turnover for the fund for the self-employed (OAEE).

The troika further requested figures on the financial state of social security funds and a detailed program of state sector layoffs. Up to the end of June some 2,000 civil servants would have to leave, but the troika wants details for all layoffs up to end-2014, totaling 15,000.