Reform plan among conditions

Finance Minister Gikas Hardouvelis outlined on Friday the government’s new reform model, which will form part of the “new relationship” between Greece and its eurozone peers involving the supply of emergency credit if Athens requires it.

In his address to the Capital + Vision conference in Athens, Hardouvelis said that the main pillars of the new reform model include improving both the business environment and the the efficiency of the public sector, strengthening the institutional roles of justice and the educational system, and the application of a program of gradual tax exemptions that will be in line with the fiscal convergence targets.

This new relationship, which will have the Greek reform model as one of its conditions, “will be determined in detail in the coming period,” said Hardouvelis, referring to the months up to the start of 2015.

“We are trying to successfully complete the current and final assessment of the second Fiscal Adjustment Program and prepare for the new relationship with our partners from early 2015, as well as for the agreement for the lightening of Greece’s debt,” said the minister.

Besides the reform model, the new relationship will hinge on two more elements, according to Hardouvelis. The first concerns the capacity of the country’s funding from the money markets; after all the government’s main concern is to refinance Greece’s obligations for 2015 from the markets. The second element concerns the existence of a capital reserve that will operate as a mechanism to strengthen the confidence of the markets in Greece. This will likely be created using the unused reserves of the HFSF bank bailout fund, amounting to some 11.4 billion euros, now that the banks’ stress tests have ended with positive results.

“Regarding the capital reserve, we already know that it could include – with the agreement of our partners – the funds set aside for the Hellenic Financial Stability Fund… as they will not be used after all,” Hardouvelis said.

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