After a marathon 18 hours the negotiations between the Greek government and the four institutions – the European Commission, European Central Bank, European Stability Mechanism and the International Monetary Fund – concluded. Both sides reportedly agreed on the primary deficit of 2015 and surpluses of 2016 and 2017, while ruling out introducing any new measures in relation to achieving fiscal targets for 2015-2016.
Following the conclusion of the negotiations with the institutions delegates at teh Athens Hilton, the Minister of Finances Euclid Tsakalotos and the Minister of Economy Giorgos Stathakis headed to Maximos Mansion, where the informed the Prime Minister Alexis Tsipras on the developments.
A government source commented that mutual compromises were made on the issues that had remained unresolved, namely the new privatization fund, energy deregulation and non-performing loans. During the talks at the Athens Hilton, the targets agreed upon are for a primary deficit of 0.25% GDP in 2015 and primary surpluses of 0.5% GDP for 2016, 1.75% GDP for 2017 and 3.5% for 2018.
Regarding the so-called “red loans”, the creditors appear to have backed down regarding the legal protection against foreclosure, with the Greek side accepting a cap on the value of protection, which will likely be 300,000 euros. The creditors however want a provision so that problematic loans can be sold on to special funds.
The government however objects and has counter-proposed the settlement or haircut of such loans by a special management body. As for the new fund to carry out privatizations of public assets, the creditors are in favor of upgrading and further improving the existing privatization fund TAIPED, so that outstanding privatizations can be completed as soon as possible. Athens wants to set up an entirely new body though, which all have a ‘loose’ timetable that will allow it to best take advantage of public assets.
The technocrats of Greece’s international creditors are pressuring for the deregulation of the natural gas market and demand the separation of networks from energy providers, to which the government objects. Although it has been agreed to discuss collective bargaining, collective dismissals and union legislation in the autumn, the creditors insist that the terms of collective labor agreements only roll over for 3 months during negotiations, rather than six.
Other issues debated included the abolition of early retirements, with the Greek government wanting to address the matter in October. Furthermore, the special tax of heating oil for farmers will occur in tow installments, in October 2015 and October 2016. It was also agreed to raise the VAT on private tutoring to 23% in order to offset a reduction of the VAT on beef from 23% to 13%.
Finally, the solidarity tax will remain unchanged for incomes up to 30,000 euros. It will, however, increase for incomes over 500,000 euros frp, 2.8% to 8%; for incomes up to 50,000 euros it will go from 1.4% to 2%; for incomes up to 100,000 euros it will increase from 2.1% to 4% and for incomes up to 500,000 it will increase from 2.8% to 6%.
