Eurogroup for Greece uncertain

25 April 2016
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The Greek government is rushing to close a deal with its creditors in an extra ordinary Eurogroup on Thursday during Orthodox Easter week, in a desperate effort to receive a disbursement to cover its financial obligations to the IMF and ECB in summer. Details about the course of negotiations between Greece and its lenders are so far unclear, although it has become more than apparent that the Greek government has conceded a €3.6bln package of ‘preventive measures’ to kick in in 2018, in the event the fiscal targets are derailed. The government has to strike a deal before Wednesday, if it wants to get ‘the green light’ by the Quartet for the process to move forward. It seems doubtful whether the €9bln worth of necessary measures (€5.4bln from the summer memorandum plus €3.6bln preventive package) can be pushed through by the Greek government, given that the creditors are demanding the €3.6bln ‘preventive package’ be automatically enacted if necessary, something the government argues is technically and politically difficult to implement. SYRIZA is already facing tough opposition within its party after information about the batch of harsh measures was made public, with some threatening to vote against the package when ot comes to parliament. The government is in search of €8bln from direct and indirect taxes and another €1bln from cuts in public spending, shifting all the burden of the new harsh measures on the shoulders of the average middle income wage earners in the private sector. The list of proposed measures the Greek government has submitted to its creditors includes among other things, a hike in VAT from 23 to 24 percent, a special consumption levy on petrol and natural gas, a tax on internet use, a rise in cable TV subscriptions, changes in car registration taxes, levies on lucky games and VAT, and a new tax on hotels linked the total of nights visitors’ stays.

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