All fronts open with creditors

All fronts open with creditors

Bad loans, the reduction of the maximum value of properties protected from auction, and a possible fiscal derailment due to court decisions were the main issues discussed by the mission chiefs from the eurozone and Greek officials during the first day of talks for the second post-program assessment in Athens on Tuesday.

During their meetings with government officials and bankers, the representatives of Greece’s creditors appeared determined to push Athens to reduce the maximum value of the primary residence of debtors for which they can seek protection.

The current protection ceiling stands at 280,000 euros (for families with three or more children), according to the so-called Katseli law, and the government is proposing bringing this down to 250,000 euros, but banks as well as the creditors consider this to be extremely high. Instead, the banks want the ceiling to drop to 100,000 euros.

Nonperforming loans have been a key theme during this assessment, with the creditors telling ministers on Tuesday that they are in favor of the simultaneous implementation of the Hellenic Financial Stability Fund’s and the Bank of Greece’s proposals for reducing the NPL backlog.

The agenda of the meetings also included the creditors’ concerns about the fiscal impact of court decisions reversing past cuts made to pensions and holiday bonuses.

Labor Minister Effie Achtsioglou is expected to formally inform the creditors’ mission chiefs on Wednesday about the final proposal of the ministry’s committee on the review of the minimum wage, which includes hikes of between 5 and 10 percent, as the government is preparing to announce the raise by end-January. However, the creditors appear quite reserved and the social partners are setting conditions for the measure to be efficient. Achtsioglou will also inform the mission chiefs of the government’s intention to abolish the subminimum wage, for under-25s.

There are open fronts across all prior actions required for the payment of the central banks’ profits from Greek bond holdings this spring, and the creditors will insist on their fulfillment by end-February.

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