Tough negotiations between the government and the troika edged forward on Monday amid ongoing disagreements between the two sides about the likely effectiveness of economic reforms proposed by Athens and the ability of the fragile coalition to impose further austerity.
According to sources, Finance Minister Yannis Stournaras and other key cabinet members involved in the talks emphasized to troika envoys that efforts to impose more across-the-board cuts such as reductions to salaries and pensions on an austerity-weary public would fuel political instability and underlined that such tough measures would not pass through Parliament.
The talks came amid growing tensions between the government and the main leftist opposition SYRIZA after the latter’s leader, Alexis Tsipras, suggested that coalition MPs who are disgruntled with current policy should “abandon the government,” drawing vehement criticism from government officials who accused him of trying to destabilize the country at a crucial moment.
One of the main points of friction in talks between the government and the troika was the new unified property tax that the government is still in the process of drafting, with the troika estimating that the levy would bring in around 2.5 billion euros – 400 million euros less than the Greek side has calculated, Kathimerini understands. The troika is said to oppose proposals for the difference to be bridged by further slashing Greece’s public investments program and to have questioned claims by Labor and Social Insurance Minister Yiannis Vroutsis that up to 900 million euros can be raised through a more efficient crackdown on tax and social security evasion. The difference of opinion means that an agreement on the size of Greece’s fiscal gap for next year is unlikely to be reached in the coming days, and almost certainly not before the scheduled submission in Parliament of the budget for 2014.
A senior Finance Ministry official said Athens hoped to reach a deal by December 9 when the next Eurogroup summit is scheduled to take place.
Other points of contention included the thorny issue of home foreclosures with the government insisting that the primary residences of homeowners who are unable to meet their mortgage payments must be protected.
Troika envoys were said to be particularly critical of delays in the implementation of the so-called prior actions that are a precondition for Athens to receive its next tranche of rescue funding, a sum of 1 billion euros.
As Greek and troika officials wrangled over economic reforms, German Chancellor Wolfgang Schaeuble, again repeated that the prospect of a second haircut to reduce Greece’s huge debt burden was out of the question. In his comments to Germany’s Bild newspaper, however, Schaeuble said that talks on a third, “much smaller” rescue package could be held if the country “meets its obligations.”