Government and institutions quartet reach agreement on VAT hike

20 April 2016
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The IMF’s Delia Velculescu will attend the latest round of talks between the Greek government and its international creditors, which begin at 10am on Wednesday. As repeatedly argued by a number of government officials, the aim is to conclude the bailout program review within April.

Government sources confirmed shortly after 1pm that an agreement was reached on indirect taxes and that the VAT will increase from 23% to 24%. The same sources commented that negotiations were under way in relation to the tax-free threshhold.

Meanwhile Eurostat is expected to published its latest figures regarding the Greek economy in 2015, which are believed are to better than the initial estimations. In a phone call to German Chancellor Angela Merkel on Tuesday, Prime Minister Alexis Tsipras argued that these figures must be taken into consideration for the review.

Additionally, an unnamed Finance Ministry official underlined that the Greek government has rejected the call by its creditors for ‘precautionary’ measures worth 3 billion euros. These measures are to be introduced if primary surplus targets are not met.

The same source noted that the institutions have not accepted everything provided in the new tax and pension system reform bill. Nevertheless, the Greek government is open to amendments.

In Tuesday’s talks with Finance Minister Euclid Tsakalotos, which focused on the new privatization fund, the institutions are said to have demanded that its management be fully independent. They also called for the privatization of 27 public bodies and utilities (rather than the 11 the government has offered), which controversially includes DEPA, ELPE, EYDAP, EYATH and DEI.

Regarding the sale of independent power transmission operator ADMIE, the plan being developed at the Ministry of Energy provides 51% of the firm going to the State, 20% to private investors, while the remaining 29% of shares will be publicly traded.

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