The goverment’s attention shifted back to Brussels on Wednesday following the successful completion of a bond buyback scheme demanded by the country’s foreign creditors, who are on Thursday to decide on the release of crucial rescue funding that Greece needs to avoid default.
Both Prime Minister Antonis Samaras and Finance Minister Yannis Stournaras are in Brussels, the former to attend a European Union leaders’ summit, the latter to hear his eurozone counterparts’ take on the outcome of the buyback, for which Greece requires another 1.2 billion euros or so in loans. Athens needs the extra funds to buy back the additional bonds offered over the original target of 30 billion euros.
Greek and foreign officials on Wednesday expressed optimism that this apparently minor issue would be resolved and the green light given for rescue loans. European Commission spokesman Simon O’Connor, as well as several eurozone finance ministers, including those of Germany, Finland and France, said they expected fresh loans for Greece to be approved. Sources told Kathimerini that a positive decision was likely for the release of 49 billion euros, in installments, by the end of March, with another 3.5 billion likely to be approved if objections of the International Monetary Fund are overcome. The IMF, which, along with the Commission and the European Central Bank, has financed two rescue programs for Greece, is said to have reservations regarding both the sustainability of Greece’s debt and a proposed tax overhaul that has been drafted by authorities.
Stournaras is on Thursday expected to present his peers with the draft of that bill, one of a series of “prior actions” demanded by creditors as a precondition for continued rescue funding next year. The bill had been due to go to Parliament early this week but the IMF’s concerns about the workability of certain aspects of the bill means it must be vetted first.
The bill also faces objections from the junior partners in Samaras’s coalition, PASOK and Democratic Left, on provisions relating to the level of tax on interest on savings, on whether a top-level income tax bracket of 45 percent should be introduced for incomes in excess of 100,000 euros, and on the proposed tax burden for the self-employed.
In other political developments meanwhile there was more intense upheaval. Michalis Yiannakis, secretary of the troubled right-wing anti-bailout party Independent Greeks, on Thursday became the third party member to quit. The party’s parliamentary group is to convene on Thursday.