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Greece-Troika Negotiations Aim On Consensus

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Revenue measures of the med-term package were finalized on Tuesday, but the negotiations between the Greek government and the troika continue, regarding the collateral of the aid loan and the critical institutional changes. 

The objective is to reach to an agreement no later than Friday, finalizing two documents: the €78.4b medium-term program, which would be passed by the Cabinet, and the revised text of the Memorandum of Understanding that will be sent to Brussels. 

The negotiations focus on the content of these very crucial documents, which include the measures, institutional interventions, privatization schedule and collateral for the release of next loan instalments. Sources note that each chapter of the documents is sent for correction and approval to the competent ministers. In case of differences, the physical presence of the minister may occur, as it happened on Tuesday with the Labour Minister Luka Katseli. 

Sources indicate that there are several obscure points in the content of the new Memoranda. However, it seems the list of privatizations worth €50b and measures of €28.4b have been finalized. 

There is a detailed report on the performance of the coming three years, but it may change until it is sent to the House, with the connivance of the troika, aiming on political consensus. Government officials denied the news of reduced VAT rates, but the truth lies somewhere in the middle, according to sources. 

According to the most likely scenario, there will be no tax reduction. However, officials don’t rule out an announcement of reduction in tax rates, even by 2012 or later. 

Sources state that the reduction in tax exemption cap may be withdrawn, including pensioners or even all stipendiary. However, the equation of tax rate in fuel and heating oil will be applied. 

The amounts above will be saved through large cost cuttings (social and pharmaceutical benefits, allowances etc).
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