Negotiations again resume on Sunday between top government officials and representatives of Greece’s institutional creditors, with the Greek side, at least, aiming at a conclusion by Thursday.
The latest chapter in the Greek program “drama” comes as Easter week is observed in predominately Eastern Orthodox Greece this week, usually a period when state bureaucracy goes into idle ahead of Easter Sunday.
According to government sources, the leftist Tsipras government wants a comprehensive agreement on pension reforms (cuts), tax measures (direct and indirect hikes), the market-asphyxiating issue of non-performing loans and revenue expected from the privatization fund, a set of measures totaling the now well-known figure of 5.4 billion euros until 2018.
The goal is a 3.5-percent primary budget surplus, as a percentage of GDP, by 2018, another contentious figure that recently split lenders into two camps, with the IMF skeptical of Athens’ ability to meet the target. The result was a contingency package of measures worth 3.6 billion euros that will be activated if the Greek government fails to meet the primary budget surplus figure. The fact that European creditors – Commission, ECB, ESM – eventually lined up behind the IMF, as expressed by the Eurogroup decision on Friday, is viewed as a victory for the Washington-based Fund.
As reported by “N” over the weekend, the government will propose that an up-until-now obscure state entity, the Council for Fiscal Policy, be assigned the role of monitoring the course of the state budget and activating the contingency mechanism if necessary. Such a development would bypass the need to legislate the contingency package, something the Greek government claims is not foreseen in Greek law. Moreover, bypassing the legislative process would preclude the acerbic debate in Parliament and the opposition’s expected crescendo of criticism against the government for failing to predict and resist another austerity package – albeit a “conditional” one, in this case.
The scope and framework of such a contingency package is the primary challenge for the coming week’s negotations, with another Eurogroup meeting set for Thursday.
If all goes according to the government’s plans, talks on debt relief could start in June, when state coffers will need creditors’ financing. Despite whatever strategic planning emanating from the finance ministry and the Greek prime minister’s office, the foremost EZ finance minister, Wolfgang Schauble, has remained steadfast in his position that debt relief is not on the table at the moment. Instead, he has reiterated that reforms come first.
