Greece and troika reach compromise on EAS, not on foreclosures

The troika concluded its latest visit to Greece on Monday with an agreement apparently having been reached with regard to the future of Hellenic Defense Systems (EAS), which should be enough to trigger the release of another 1 billion euros in bailout loans, but with no deal on home foreclosures and value-added tax in the food service sector.

The proposal for EAS foresees the retention of three factories to produce military equipment, with the remaining two closing in June and September next year. There will be a resolution of the section of the company responsible for civilian projects and it will also be lumbered with the illegal state aid that EAS had received so far.

Some 500 workers will remain at the company, with the 300+ leaving EAS being offered a redundancy package that would exceed 6 million euros.

The original plan had foreseen less than 350 workers remaining at the company.

The Greek government is committed to EAS generating revenues of 13.5 million euros from exports next year, rising to 20 million the year after. If the company is not making a profit by the end of next year, it will be downsized further.

Agreeing the future of EAS was the last “prior action” remaining for the Eurogroup to approve the release of the delayed July sub-tranche of 1 billion euros. Eurozone finance ministers meet on Tuesday and are expected to give their approval. Athens hopes that the European Stability Mechanism will release the money on Thursday.

Although common ground appears to have been reached on this issue, Greece and the troika were not able to bridge their differences on other issues.

Greece is now set to legislate unilaterally to maintain VAT for restaurants at 13 percent, despite the troika wanting the rate to rise to 23 percent again, and to lift the moratorium on home foreclosures within certain strict parameters.

On the latter issue, Kathimerini understands that the new restrictions on foreclosures will not allow homes with a taxable value of under 180,000 euros (as opposed to the current 200,000) to be repossessed if the owners have an annual household income of less than 25,000 euros.

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