Troika back for bailout talks

After several taxing weeks of political instability and economic uncertainty, senior representatives of the country?s foreign creditors are due back in Athens on Monday to resume talks aimed at finalizing the terms of a new 130-billion-euro bailout for Greece and a bond swap program aimed at keeping the country on the fiscal straight and narrow.

The officials of the European Commission, European Central Bank and International Monetary Fund — known as the troika — are expected to start by taking stock of the authorities? progress on reforms before turning to the conditions of the second bailout for Greece, negotiated in Brussels in October.

Meanwhile government officials are to meet with private sector bondholders in a bid to agree on a voluntary debt restructuring which has been dubbed ?private sector involvement? (PSI).

Talks have stalled on key issues regarding the application of the PSI — a scheme which is ?a unique and exceptional case? for Greece, EU leaders emphasized at last week?s summit.

The troika inspectors are expected to focus this week on a new tax code drawn up by the government and due to be submitted in Parliament soon. Finance Minister Evangelos Venizelos has described the initiative as an attempt to establish the country?s first effective system of taxation.

According to sources, the legislation foresees the revocation of several more tax exemptions. For instance, the favorable value-added tax rate enjoyed by residents of remote islands will be abolished. Farmers too will have tax privileges revoked. The stricter monitoring of the tax status of self-employed professionals is also said to be on the cards.

Another area inspectors are expected to focus on is labor relations, following up on the progress of talks between the government, employers and workers? unions.

According to sources, the chief goals of the troika are to reduce operating costs in the private sector and annul the salary increases included in a three-year collective labor contract signed in the summer of 2010.

After their meetings this week, the inspectors will take a break for the Christmas holidays and return in January to resume negotiations, the sources said.

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