Athens' proposal to encourage the IMF and European creditors to compromise on the Greek program -- but without adversely affecting the Greek side -- foresees a reduction of high primary budget surplus targets after 2019, with the monetary difference going towards reducing skyrocketing taxes and contributions.
The proposal was unveiled in a very high-profile manner on Monday, with Greek Finance Minister Euclid Tsakalotos including the prospect in his address at an Athens economic conference -- hours before EU Commissioner Pierre Moscovici addressed the same venue.
In order to bridge standing differences between the IMF and European creditors, Athens' proposal is to cut the annual primary budget surplus target from 3.5 percent of GDP to 2.5 percent of GDP. Based on current projections of Greece's GDP at the time -- and assuming those growth-positive forecasts pan out -- the difference would be around 1.8 to 1.9 billion euros a year. The leftist government would previously commit to use the entire sum generated from the lower fiscal target to offset higher taxes and social security contributions - but not for social spending, which Greek governments over the decades have favored.
The aim would be to boost competitiveness in the Greek economy -- something all sides have urged -- and to lower primary budget surplus targets, which the IMF and Athens consider as unrealistically high and an austerity-dominated fiscal policy.
In terms of social spending hikes, according to Tsakalotos, Athens would agree with creditors to funnel whatever extra revenue it can squeeze out from curbing tax evasion, fuel and other types of smuggling (tobacco, alcohol etc) and off-the-books employment.
As with previous such addresses, the Greek minister peppered his speech with criticism of both European institutions and the IMF, essentially the country's sole lenders.
