Gov’t eyes fiscal space of 1.5 bln in talks with creditors

Gov’t eyes fiscal space of 1.5 bln in talks with creditors

The government’s negotiations with the country’s creditors are focused on five fronts, as Athens seeks to secure additional fiscal space so it can implement tax breaks and handouts in accordance with its policy. Among the government targets for this year are cutting the solidarity levy and the further reduction of the Single Property Tax (ENFIA).

“Our priority is to secure some fiscal space to apply our policy,” a senior Finance Ministry official said on Wednesday, stating the five fronts in the negotiations.

They are the change of use for the profits of eurozone central banks from Greek bond holdings (SMPs and ANFAs), to investments rather than servicing the national debt; the option of transferring any primary surplus overrun from one year to the next; the exemption of the funds for tackling the increased migrant flows from the fiscal result as the post-bailout program defines it; the reduction of the primary surplus target; and the use of any primary surplus overruns for the reduction of ENFIA and the solidarity levy.

These requests, the same source added, have already been communicated to the creditors, while the first three of them were the object of specific proposals Finance Minister Christos Staikouras delivered on Wednesday to the heads of the creditors’ mission in Athens in the context of the fifth post-bailout assessment. “We are playing with our cards laid on the table,” said the same ministry official.

The first three requests add up to fiscal space of at least 1.5 billion euros for this year: The change in the use of SMP and ANFA profits will secure 1.3 billion euros for investments, the exemption of funds for tackling migration some 200 million euros, plus any funds from the primary surplus. It remains unclear, the ministry official noted, whether and how the fiscal space from the SMPs and ANFAs will count toward the primary surplus.

The issue of the reduction of ENFIA and the solidarity levy is expected to be discussed from April, when the picture of the projected fiscal result of the year will become clearer.

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