Greece finalizes reforms ahead of Eurogroup, as eurozone splits remain
The Greek government has finalized some details regarding structural reforms and fiscal monitoring ahead of a meeting of the Eurogroup on Tuesday, as the eurozone remains divided on how to move forward to the Greek program.
Prime Minister Antonis Samaras and Finance Minister Yannis Stournras met over the weekend to agree on the pending changes that had been demanded by the troika.
This led to the government drafting a legislative act that grants the Finance Ministry greater powers to oversee other ministries. According to the legislation, if a ministry fails to meet its fiscal targets for two quarters in a row, the Finance Ministry will place an inspector at the department in question to oversee spending practices.
The Finance Ministry will also have more control over the finances of local authorities and public enterprises (DEKOs). Executives at DEKOs face wage cuts or redundancy if they fail to meet the financial targets set by the government.
Any municipalities that fail to get their finances in order will have to increase their revenues from taxes and rates rather than receive more funding from central government, according to the legislative act.
The government also agreed on some “prior actions” demanded by the troika, which licensing for vocational colleges and installing tracking devices on trucks that transport fuel.
Samaras and Stournaras wanted to tie up these loose ends ahead of Tuesday’s Eurogroup, when the Greek government is hoping to hear positive news on the disbursement of its next loan tranche, the financing of its two-year extension and possibly with regard to the sustainability of its debt.
On Monday, however, it remained far from clear what, if any, kind of deal would be reached given the differences of opinion between the eurozone and the International Monetary Fund, and within the eurozone itself, with regard to the way forward.
The division within the eurozone was highlighted by comments made by French Finance Minister Pierre Moscovici with regards to some of his colleagues at last week’s Eurogroup, when only a decision on a two-year extension was taken.
In a fly-on-the-wall documentary for the Dimanche program for Canal +, Moscovici revealed that he raised his voice during last week’s meeting because he grew frustrated with another finance minister’s negative stance with regard to Greece.
“There are some crazy people in that room,” the French minister is heard saying. “Yes, it was necessary [for me to support Greece’s position] but I had to raise my voice to do this.”
Meanwhile, European Stability Mechanism managing director Klaus Regling expressed his opposition to the idea of a debt writedown for Greece in an article published by the German daily Handelsblatt newspaper Monday.
Regling said public sector haircuts should only happen in “extreme circumstances” and that Greece would be able to reduce its debt by a third through low interest rates on its bailout loans.