Three priorities for the next government

As Monday?s Eurogroup meeting did not discuss Greece?s bailout package, attention is shifting to the main economic priorities the new government will have to focus on until the end of the year.

Besides Athens?s obligation to complete the new memorandum with its international creditors and the new loan contract, in the next 55 to 60 days the incoming government will have to proceed with the 2012 budget, the new national tax system and the bill for the involvement of all private sector bondholders in the restructuring of the country?s debts.

At the same time, a number of ministerial decisions are needed for the implementation of the measures that have already cleared Parliament, as well as the promotion of reforms, with the opening up of closed-shop professions being the most important.

The most urgent issue now is the new budget. The outgoing government?s plans are for the draft budget to be tabled in Parliament next Monday or Tuesday. It is certain that New Democracy will support it on the condition it does not contain any new measures on top of those that have already been announced, according to sources.

Finance Minister Evangelos Venizelos has reportedly assured the conservatives that there will be no additional measures. There is a risk this may not not be the case given that the budget deficit for 2011 will be higher by 0.1-0.3 percent of gross domestic product from the 9.1 percent estimate by the troika, owing to the fresh problems expected in the execution of the budget.

As a result Greece?s creditors may well demand new measures for 2012, although the ministry is hoping to avoid that as the margin of difference is relatively small and because there will be some money saved from the interest reduced due to the haircut.

As for the new tax bill, that is expected by year?s end, although everything is possible at this stage. The private sector involvement bill with the ?collective action clauses,? forcing reluctant bondholders to follow the majority and accept a haircut, is also likely to come to Parliament by the end of December.