The Troika’s first analysis of Greece’s reform proposals are positive.
The proposal is a good basis for negotiations on a Greek aid program, said EU sources on Saturday.
The review of the European Commission , the IMF and the ECB submitted to the Eurogroup, which meets at 15th
But the institutions underlined that the implementation of the program must be carefully checked with the “structural benchmarks, milestones and quantitative benchmarks”.
Greece’s actual financing is 80-85 billion euros for recapitalization of Greek banks are included, according to the Greek newspaper Kathimerini.
The troika has been estimated that a 74-billion program is needed.
A major stumbling block during the Eurogroup meeting on Saturday will be to overcome the lack of confidence that has been built up between the lenders and Greece during the five months of stormy negotiations.
Unlike previous negotiations is that it now comes a third, three-year aid program. Lenders may require more extensive reforms than what they asked for to finish the other one and then pay out the € 14.6 billion that remained.
The German Finance Minister Wolfgang Schäuble believes that the outcome of the Eurogroup meeting is completely open, according the German spokesman Frank Paul Weber.
The spokesman did not comment on a task in the newspaper Bild that Wolfgang Schäuble believes that the Greek proposal is “insufficient” and that the finance minister would object to further conversation.
The night of Saturday voted by the Greek Parliament with an overwhelming majority for the government’s reform proposals – 251 yes, 32 no, eight abstentions and seven absent.
Behind the broad support was the conservative New Democracy, PASOK, the nationalist Independent Greeks ( as part of the government) and a majority Syriza members.
No, voted the extreme right and extreme left-wing Golden Dawn and the Communist Party, and two Syriza members. The closures and absentee voting was Syriza members. A government reshuffle is expected now.
The proposal is very similar to the Troika’s proposals on 25 July. One exception is that the Greek proposal retains the reduced VAT on remote islands (but no longer on the islands closer to the mainland).
In addition, the proposal previously agreed share of the tax reform, 13 percent of hotel stays (concession from Troika tourism). 13 percent VAT also get water, energy, food (except processed foods by 23 percent).
The pension reform means that the retirement age is raised to 67 years from 2022, or 62 years, at 40 years of contributions to the pension. Additional contribution to poor pensioners (EKAS) phased out by the end of 2019th
The corporate tax rate is raised from 26 percent to 28 percent.
Eurozone finance ministers however have major objections to the Greek reform program – both in terms of the content and implementation.
It said the President of the Eurogroup Jeroen Dijsselbloem told reporters on his way into the Eurogroup meeting on Saturday.
“We are not there yet. It will be a difficult meeting” he said.
“There are deficiencies in the content – both reforms and budgetary effort – and also for the confidence – in the implementation and government ownership of the program,” he said.
To fix the lack of confidence in other euro countries, the Greek government now display a “very, very strong” will to rebuild trust, said Jeroen Dijssebloem.
Other finance ministers agreed.
“What missing is details. We also need to guarantee implementation, “said Austrian Finance Minister Hans Jörg Schelling.
He said the program will amount to 72 billion euros and the IMF need to be included.
French Finance Minister Michel Sapin said that the Greek government must explain when and how to implement things it has promised.
The German Finance Minister Wolfgang Schäuble said that the negotiations will be “exceptionally difficult”.
“The proposals from Athens is not enough at all. Funding gaps are far larger than what we have experienced before, “he said.
Some debt reduction is not possible because the EU Treaty does not allow it, he said.
Slovak Finance Minister Peter Kazimir said the reform package would have sufficed for the second support program, but do not do it for the third program.
For him, the issue of Greece’s large debt is sustainable a major problem.
Italy’s finance minister Pier Carlo Padoan pointed out that the intention of the Eurogroup meeting is not to reach a deal now. The goal is to start negotiations.
As the Greek economy is shrinking rapidly needed stimulus to growth will also help to ease the debt burden, said, Ireland’s finance minister. But when the financial situation is strained, it must be through reforms on the supply side.
“The government’s majority is reduced, so there are questions about the confidence. The government should enforce measures quickly, “said Michael Noonan.
The Irish Finance Minister also objected to the Greek proposal did not mention the Greek banking sector, where the situation has obviously deteriorated considerably.
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