After aid approval, gov’t turns focus to new measures, pension reform

After aid approval, gov’t turns focus to new measures, pension reform

The government has shifted its focus to a new set of prior actions, including a formula for dealing with nonperforming business loans and a push to the stalled privatization program, following the decision by the European Stability Mechanism on Monday to unlock 2 billion euros in pending rescue loans to Greece.

Prime Minister Alexis Tsipras discussed the government’s priorities in a meeting with key aides on Monday.

The meeting came as the ESM gave the green light for the release of 2 billion euros in funding following the approval in Parliament last week of a final set of measures linked to that money.

ESM Managing Director Klaus Regling said the decision to unlock the money “reflects the Greek government’s commitment to the program as it implemented an extensive list of essential reforms. These include key financial sector reforms which are important to support the ongoing bank recapitalization process,” he said.

European officials made it clear on Monday that some 10 billion euros in loans set aside for the recapitalization of local banks can be disbursed as soon as the precise amount required by Greece lenders has been determined (it is expected that some 6 billion euros will be needed.)

Government officials are now poring over a second list of prior actions, linked to another 1 billion euros in loans. Kathimerini understands that two contentious reforms – plans to overhaul the pension system and an increase to taxes on farmers – will not be on the list.

Last week’s vote on bailout measures led to two dissenting lawmakers being ousted from the government, narrowing its majority in Parliament to three seats. It appears the priority is to avoid any further political damage that could derail Greece’s bailout.

According to sources, the new list is to include a formula for dealing with nonperforming bank loans and the creation of a new privatization fund with the sell-off of the Independent Power Transmission Operator (ADMIE) at the top of its agenda.

A new unified salary structure for civil servants and the creation of a new independent secretariat for public revenues is also said to be on the list.

The aim is for the second set of prior actions to be voted into law by mid-December.

Although the pension overhaul will not be on the second list of prior actions, the government plans to draft the reform this week and put it up for public consultation, Kathimerini understands. Ideally it would be put to a parliamentary vote in December.

It remains to be seen whether this is feasible. The pension overhaul, which will bring new cuts to monthly payments, is so controversial that Tsipras has appealed for a cross-party consensus on the issue.

According to government sources, the pension overhaul is also a key reform demanded by creditors to secure the launch of talks on debt relief.

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.