After pact with lenders, gov’t has to pass bill, agree next reforms

After pact with lenders, gov’t has to pass bill, agree next reforms

Greece and its lenders agreed late on Monday night the measures needed to unlock another 12 billion euros in bailout loans but there will be no letup for the government as it has to pass the reforms through Parliament by Friday and immediately begin discussing the next set of prior actions.

The key element in the latest agreement between Athens and the institutions is a settlement on the home repossessions. The two sides have agreed that any homeowners whose primary residence is valued at less than 170,000 euros and who have an annual income of 8,180 euros if they are single, 13,917 if they are a couple, and rising by 3,361 euros for each child (up to two children) will not be in danger of having their homes repossessed.

This is thought to cover roughly one in four mortgage payers. Some 350,000 of 1.2 million mortgages are not being serviced on time at the moment.

However, a second category of homeowners has been added to those who could be in line for protection. Those owning homes with a value up to 230,000 euros and an annual income of less than 35,086 euros for a couple with two children will be able to reach an agreement with their banks, who will have the right to take into account other wealth criteria.

Greece and its lenders were not able to reach an agreement on the remaining nonperforming loans (NPLs) and under what conditions banks will be able to sell them to distressed debt funds.

This will be just one of several issues that the government will have to start discussing straight away with the institutions so they can prepare the list of prior actions to secure the release of another 1 billion euros in bailout funding.

The current set of prior actions are due to be passed through Parliament on Thursday, which would allow the Euro Working Group, which meets on Friday to allow the release of a 2-billion-euro subtranche and another 10 billion euros set aside for bank recapitalization.

The vote in Parliament on Thursday is likely to be the first serious test for the government as the leftist-led coalition had promised to protect primary residences.

The fact that authorities moved from pledging to shield virtually all first homes from repossessions to guaranteeing protection for only a quarter is certain to test the loyalty of coalition lawmakers.

Although seeking to put a positive spin on the development, sources close to Prime Minister Alexis Tsipras privately expressed concerns that coalition MPs did not defend the agreement.

Despite their concerns, the general sense in the ranks of the government was that the bill will pass through Parliament, and that the government’s majority in the House will not be put at risk, as the measures are directly linked to the rescue of Greece’s banks.

Still, it quite possible that a few MPs from either SYRIZA or right-wing Independent Greeks (ANEL) will vote against the foreclosures.

ANEL legislator Nikos Nikolopoulos, who has distanced himself from the government in the past few votes, said on Tuesday that he would vote against the bill. ANEL leader Panos Kammenos is to convene his party MPs on Wednesday to seek to keep them in line.

Opposition parties have indicated that they will vote down the bill too, at least the provision on foreclosures, meaning that the government will have to secure as many coalition MPs as possible.

New Democracy on Tuesday accused the government of “political fraud” for going back on promises to protect all primary homes.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.