Greece submits new economic reforms, but no breakthrough yet - as it happened
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Athens has warned its creditors that the viability of the EU is at stake, as it submits a new economic programme in an attempt to get financial aid before it runs out of cash
A pensioner raises his fist aloft as he marches in Athens shouting slogans against austerity cuts today. Photograph: Nicolas Koutsokostas/Demotix/Corbis
A pensioner raises his fist aloft as he marches in Athens shouting slogans against austerity cuts today. Photograph: Nicolas Koutsokostas/Demotix/Corbis
It’s late in London, and inching towards bedtime in Greece, so here’s a quick recap.
Greece has submitted its most comprehensive reform plan yet to its creditors, but has yet to unlock any bailout funds.
Athens proposed a 26-page list of reforms today, from tax evasion measures to a new bad bank to help clean out its financial system. It warned that action was ‘urgently needed’, to preserve the viability of the eurozone.
Greece’s government has also proposed setting up a ‘bad bank’ to handle the bad loans that are clogging up its financial system.
It warns that there are “Critical Deficiencies” in the banking sector today, in today’s 26-page list of reforms:
The Greek banking sector has been marred by clientelism, by too close a link with the mass media and the political systems (through the provision of loans on non banking principles) and, lastly, by lending practices that were either too tight or too loose. The economic crisis has in addition created a vast amount of NPLs [non-performing loans] that impedes credit creation.
And here’s the proposed reform strategy:
Broad and deep structural reforms aimed at ensuring financial stability, appropriate credit expansion and governance that constitutes a significant departure from suspect practices of the recent and not too recent past. The Greek government has planned a broad reform programme in order to address critical deficiencies of the banking sector, through the establishment of strong institutions and the introduction of solid processes for the functional supervision of the banks that ensure financial stability, a robust banking sector and banks that are run on sound 8 commercial banking principles.
Dealing with the very high levels of NPLs is a top priority for consolidating the banks and restarting the economy. The government wishes to explore the possibility, in conjunction with the institutions, of a capital asset management company to be created towards dealing with NPLs utilizing the remaining buffer of the HFSF.
Greece’s government is proposing to raise the minimum wage...however, it also predicts that the fiscal impact in 2015 and 2016 will be “negligible”
The reforms plan states:
Proposed reforms will be introduced in stages: unifying the minimum wages of “white” and “blue collar” workers, abolishing wage differentiation based on age, and gradually increasing the minimum wage after consultations with the social partners.
The section on Greek privatizations begins with a pop at the failure of the past:
The initial goal for revenues from privatizations was €50 billion between 2011 and 2016, with a €5 billion target for 2011, €10 billion for 2012 and €5 billion for 2013. In practice, proceeds from privatizations amounted to €1.6 billion in 2011, no revenues in 2012 and €1 billion in 2013. Seldom has a privatization program failed so spectacularly!
The new government is proposing to consider future privatizations on a “case-by-case basis”.
Existing contracts “will be honoured”, but Greece will also use all legal powers to guarantee an equity stake in privatised firms, and protection for workers. But will that be enough to placate critics in the Syriza party?
The first item is called “Intensification of audits on lists of bank transfers and offshore entities”, and is said to raise €725-€875 million in 2015. €1 billion from 2016 onwards.
It also includes plans for a “VAT lottery scheme”, where consumers who pay the sales tax can enter a prize draw.
A “Wealth database-registry” to prevent rich Greeks hiding their assets is planned.
And the Finance Ministry is also proposing to stop tax evasion by self-employed people through “a point of sale electronic application that will record every incoming customer and transfer real-time notifications to the authorities”.
Over in Athens officials are denying that today’s teleconference with with the euro working group went badly.
But they are also saying April is likely to be a month packed with negotiations ... suggesting that a reform-for-cash deal is unlikely to be found at least until the next scheduled euro group of euro area finance ministers on April 24.
Helena Smith reports:
Government sources are saying another Euro working group will be held next Wednesday - traditionally regarded as the Holy Week by Greek Orthodox faithful who will celebrate Easter a week later than the Catholic communion on April 12.
“Today’s teleconference took place in an unexpectedly good climate even if there was no decision to dispense [bailout] funds,” one official said:
“There is a growing sense of convergence even if the talks are difficult.”
Auditors were pouring over the Greek government’s proposed reforms in minute detail, they said, adding that “the whole of April” was likely to be taken up with negotiations.
A police looks at leaflets thrown by anti-establishment protesters outside the Greek Parliament today. Photograph: Kostis Ntantamis/AFP/Getty Images
So, how much progress was made on today’s eurozone conference call?
One eurozone official has told Reuters that there is been “progress and convergence”, but there is still “quite some work that needs to be done” to reach a successful conclusion.
Greece has also warned that growth in 2015 and 2016 will be weaker than previously expected, confirming that its economy has deteriorated in recent months.
The Ministry of Finance now only expects growth of 1.4% this year, down from 2.9% estimated in the 2015 budget, rising to 2.9% in 2016 (down from 3.7%).
Unemployment is also expected to be higher than planned, this year and next year.
The Hellenic Republic considers itself to be a proud and indefeasible member of the European Union and an irrevocable member of the Eurozone. Yet the viability of that Union, and especially of the common currency, is now in question, in the minds of many Greek citizens as it is in the minds of many among our European partners.
The question before us all, as Europeans, is whether the European Union can rise to the challenge before it. It is necessary now, without further delay to turn a corner on the mistakes of the past and to forge a new relationship between member states, a relationship based on solidarity, resolve, mutual respect and a new hope for common progress.
To that end, it is now urgent that the books be closed on the past programme with the rapid conclusion of the Final Review, so that Greece and her partners can proceed to negotiate and to launch a new partnership and a new model for development and growth in Greece.
'Viability of Union, and especially of the common currency, is now in question,' warns new Greek eurozone document
Peter Spiegel of the Financial Times has obtained the list of reforms which Greece has proposed to its creditors today.
It’s 26 pages long, covering taxation, privatisations, Greece’s public sector, its labour market and healthcare, among others.
The Greek goverment says it is a “comprehensive list” of policy reforms, meeting its commitments to its creditors and to the Greek people, and urged its lenders to respond quickly, and positively.
The government requests a speedy and successful conclusion of the Final Review on the basis of this list, so that shortterm funding issues may be resolved and the current crippling economic and financial uncertainties brought to an end. This is an urgent and necessary precondition for the success of the economic and reform program.
But Peter, having perused it, reckons it may not go far enough.
The new reform measures are similar to Friday’s initial effort and fail to address several issues that bailout monitors have insisted on, including an overhaul of the Greek pension system and further labour market liberalisation.
Indeed, the proposal appears to reverse past reforms in several of these areas. The document includes €1.1bn in new spending this year, more than half of it reinstating a so-called “13th pension” — an extra months’ pay — for low-income pensioners. The document suggests that change would add €600m this year.
It also would suspend a so-called “zero deficit clause” that would force further cuts to state pensions; the measure would add another €326m this year.
And while the document includes five separate measures under the heading “labour market reforms”, they include a gradual increase in the minimum wage and strengthening collective bargaining — both measures that would effectively undo reforms adopted earlier in the rescue programme.
Still, the document includes several concessions to eurozone authorities, particularly in the area of privatisations. Some government ministers from the far left of the governing Syriza party have publicly stated that all privatisation of state assets would come to an end.
The Greek government has provided further details of its reform plans to lenders today, in an attempt to unlock bailout funds.
Helena Smith reports that:
Greek officials say in addition to €3.7bn worth of fiscal measures the left-led government is proposing, privatisations worth €1.5 bn in 2015 have also been outlined in the package the finance ministry has drafted.
The operation and management of 14 regional airports (concessions long sought after by Germany) has been included in the privatisations.
Reuters is also reporting that Greece fleshed out its propose reforms, but the two sides are still divided over pensions and labour reform.
* Greek Fin Min official says toughest issues in talks with lenders are labour and pension reforms - RTRS
Over in Athens, officials say a campaign of rumour, innuendo and deliberate leaks is being waged against the new government.
Helena Smith, our correspondent, reports:
Greek officials are finding it increasingly hard to hide their exasperation with tactics they say are deliberately aimed at undermining Athens’ new leftist-led government. “A campaign of rumour, innuendo and deliberate leaks is being waged against us,” said one well-placed source.
“They keep saying ‘the Greeks are not well prepared, they haven’t done their homework, their proposals are vague’; all of which are grotesque and preposterous lies.
The Greek side has never been as well prepared and the issue really is not whether they agree with our figures but whether they want an agreement.”
“What we are seeing is an intent to stall the situation so that there is an accident in our banking system and liquidity becomes so constrained we are unable to pay an installment or one of the banks is forced to shut down,” another official said.
“The banking system is at risk, outflows are growing, non-performing loans are mounting. What they are doing is criminal. The February 20th agreement was supposed to give us four months of financial stability and instead they are using it to asphyxiate us.”
Today’s euro working group meeting was important, Greek officials said, because it would signal whether creditors were prepared to be conciliatory. Thomas Wieser, an Austrian who presides over the group, is believed to be more aligned to the school of hardliners lead by Germany finance minister Wolfgang Schauble.
Our official adds:
“The Euro working group prepares the ground for the euro group so if anything it would be surprising if there were a breakthrough....It seems they want to push us to the brink of Grexit, squeeze us to our last drop of blood and breath in the hope that they can get just a little bit more out of us.”
Greece’s strength lay in its proposals – a 52 page document that the government was prepared to disclose if necessary. The anti-austerity coalition was sticking to its guns and refusing to reduce pensions, make cuts or forge ahead with mass lay-offs.
Tensions remain high, judging by this final quote:
“From the start we made that clear. The whole aim is to defeat this government. If they see us retreating they will wipe us out. From time of the Roman legions that is how the Germans have worked. We are not going to do them the favour.”
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