The greek parliament approved yesterday, in the night, a new tax package and decided to create a new fund for privatizations and has prepared an emergency plan that you should turn on automatically if the fiscal targets are not met. Once again Alexis Tsipras government had therefore to take unpopular but necessary measures to persuade international creditors. With yesterday’s vote Greece presents itself – with the “homework done carefully” as the premier said Tsipras – Eurogroup tomorrow which will decide whether to unblock aid of approximately EUR 5 billion over 86 billion provided for in the third rescue package for Athens.
primary balance and debt. Data as a percentage of GDP. (Source: European Commission)
Tsipras: “We have done our part, now it’s up to European leaders’
Among the protests of citizens yesterday to thousands protested throughout the day peacefully in Syntagma Square in front of Parliament, the greek government has pushed through a maneuver that has some elements to break with the past. Chief among them the possibility that what was promised to be realized, that is, both within the reach of the pockets of the country: “The Greeks have already paid a lot, but probably the first time – said Tsipras before the parliamentary passage – we can all see that these sacrifices can be the last”. But also the determination on privatization and anti-slippage automatic mechanism seem to be going in the exact direction requested several times from Brussels. “The message to European leaders – said Tsipras – is clear: Greece has been in full its part, now the Eurogroup must assume its responsibilities.”
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The new austerity measures: VAT and privatization
the coalition argues that Tsipras – formed by Syriza and Anel, the nationalist party – was confirmed to lead the country last September but can rely on a narrow majority of 153 deputies on 300 of the Parliament. Yesterday only a majority of the Member voted against the proposed interventions by the government. “We are introducing measures and policies that are in serious conflict with our core values,” said Vassiliki Katrivanou, announcing his resignation from parliamentary office. Katrivanou will however be immediately replaced by another member of Syriza.
Yesterday’s vote – on a law of 7 thousand pages – has given the green light to new taxes. It is increased VAT from 23 to 24% on various products, including gasoline, cigarettes, coffee, the use of internet, pay TV and luxury goods. It has introduced an additional tourist tax and it was decided an increase in property taxes. the tax breaks have also been abolished for the Greek islands. The budgetary corrections decided yesterday worth about EUR 1.8 billion and will add up to 3.6 billion in spending cuts and new revenues launched two weeks ago – mainly by changing the pension system and levies on income – the maneuver in the complex comes aa 5.4 billion euro. It will also be activated – as required directly from Germany – a new fund, called the Public Investments Company, which will be responsible for managing the privatization accelerating the sale of thousands of public real estate assets.
A mechanism Automatic for the rigor
the Athens government has been trying to unlock the negotiations with Brussels and with the international Monetary Fund by binding to an automatic adjustment mechanism of accounts – for an amount of 2% of GDP – in if the primary surplus, so the budgetary outcome that takes no account of interest payments on debt, does not reach 3.5% of GDP by 2018. a goal is not far from reality if Greece will keep the path undertaken with Tsipras and confirmed by the latest EU Commission forecasts.
the Eurogroup tomorrow could therefore open up some sympathy towards Greece, although among the 19 finance ministers remain deep divisions on relaxing the pressure on debt Athens requested by the international Monetary Fund.
Eurogroup on Greece, approved the package of measures voted by Athens
positive reactions in the Eurogroup view
the new spending cuts and tax increases approved by the greek parliament is a “key step” to unlock the disbursement of new aid. I said this morning, the EU Commissioner for Economic Affairs, Pierre Moscovici. “A key step was taken toward the end of the first phase of the greek program, I hope, and I want an agreement at the Eurogroup meeting,” said Moscovici. “The automatic adjustment included from Athens in the newly adopted law is a mechanism that will be used only in an emergency, but which will not be used because the reforms will be enough,” said Moscovici adding however that “it is an important element to reassure partners on their promises. “
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