Eurogroup Chairman Jean-Claude Juncker appeared confident on Friday that an agreement could be reached between Greece and its eurozone partners for the release of a fifth tranche of emergency funding and possibly also a second bailout package.
Following talks in Luxembourg with visiting Prime Minister George Papandreou, Juncker said the two men had been ?in total agreement? as regards Greece?s fiscal targets, structural reforms and an ambitious privatization drive aimed at raising 50 billion euros by 2015.
But he made it clear that further financial support would be dependant on the Greek private sector sharing some of the burden of economic recovery. ?I expect the Eurogroup to agree to additional finance being provided to Greece under strict conditionality,? Juncker told reporters. ?This conditionality will include private sector involvement on a voluntary basis.?
Juncker also noted ?with satisfaction? that the Greek government had agreed to the creation of an independent agency to oversee the privatization drive.
Calling Juncker ?a friend of Greece,? Papandreou said, ?Greece will continue to work hard, and Greece is committed to fully honor its obligations.?
Earlier in the day, officials of the European Union, European Central Bank and International Monetary Fund – who have been reviewing the progress of the government?s economic reforms – issued a statement saying that the review had been successful and that the fifth tranche of emergency loans, valued at 12 billion euros, would ?most likely? be released in early July.
The review noted ?significant progress, in particular in the area of fiscal consolidation,? adding however that more reforms were necessary to revive the economy.
It added that envoys had agreed with government officials on ?a set of economic and financial policies? and called for their ?strict implementation,? referring also to the government?s midterm fiscal program, which aims to raise some 6.4 billion euros through tax increases and cuts to the public sector.
These additional measures are expected to be submitted in Parliament early next week. They include the reduction of the taxfree threshold, from 12,000 euros to 10,000 or 8,000 euros for workers and pensioners and from 12,000 to 6,000 euros for self-employed professionals.
Another measure, to come into effect in the fall, will oblige restaurants to charge 23 percent value-added tax rather than 13 percent. Further taxes are planned for soft drinks, natural gas, heating oil and tobacco.
Taxes will also be raised on large yachts, swimming pools and luxury cars.
The midterm program is also expected to set a time frame for the abolition of dozens of public bodies. In addition, the salaries of civil servants will be taxed a further 3 percent to go toward a solidarity fund for the unemployed.