Gov’t facing an uphill fiscal agenda

The government faces a particularly tough agenda up until the end of September, with priorities on finalizing the details of the Single Property Tax (EFA) and updating the medium-term fiscal program, where scenarios on the viability of Greek debt and the implementation of the required initiatives for the disbursement of the 1-billion-euro installment in early October take center stage.

At a meeting under Prime Minister Antonis Samaras Tuesday, Finance Minister Yannis Stournaras is due to provide an overview of issues.

The troika has warned that if the EFA plan proves unviable in terms of revenue collection, the emergency property tax that was introduced in 2011 and collected via electricity bills will have to be extended. The country’s creditors have calculated that the EFA should yield 4.15 billion euros, but only 2.9 billion of this is actually expected to be collected.

The Finance Ministry is also currently thrashing out next year’s budget, and especially the midterm fiscal program for 2014-17, which will be finalized in negotiations with the troika in the second half of September. According to the most recent troika reports, the program will have to include fiscal measures worth 4 billion euros in the 2015-16 period. The troika is said to have asked that this sum be derived from a further restructuring of the public sector but ministers insist that there will be no more cuts in salaries and pensions, or new taxes.

Another open issue is whether new fiscal measures will be required for 2014, and the Finance Ministry hopes that the recession will not overshoot projections, which would exacerbate matters.

The government is also keen to prepare scenarios regarding the viability of the country’s debt, as the debate on a further haircut by the foreign official sector is seen acquiring prominence in the latter part of the year.

Finally, specific measures are required for the disbursement by the creditors of the 1-billion-euro installment, namely the placement of 12,500 public sector workers in a mobility scheme, the liberalization of the legal profession and specific plans for the restructuring of the heavily indebted state defense industries, ELVO, Larco and Hellenic Defense Systems (EAS).