So the Eurogroup completed its meeting on Tuesday and
the results were as expected, that is, no decision. Although the Eurogroup said
that Greece is making progress on the negotiations, there are significant
distances on the issues of primary surplus, labor, and pensions.
The Brussels Group is now asking for a 2.5% primary
surplus, which translates to 900 million euros, they are persistent on the
issue of the 5th review(based on the last memorandum), but liquidity
is running out, as officials now admit that there are 15 days remaining until
cash will run out.
If an agreement is reached, as optimism persists in
the administration (for an infinite time), Greece will receive funding of 14.4
billion Euros. Meantime Greece paid 700 million Euros yesterday to the IMF,
from a fund set aside to the Bank of Greece, for urgent circumstances. The cash
amount that Greece paid was 100 million.
The government was expecting an honorable compromise
from yesterday’s Eurogroup meeting. This would restart the process of gradual
financing, since cash flow is gradually coming to a drought. Since the
creditors acknowledge progress on the discussions, the government is rushing to
bring in legislation on issues that have been agreed upon, thereby as laws are
passed in Parliament, funding will come in analogously.
For example, Greece has agreed on a single tax (16 or
18%) on goods and services, on privatizations, on tax evasion, on the spin of
the General Revenue Service of the Office of Management and Budget, to an
independent agency, free of political perks. Also, they have agreed upon a levy
tax on 5 star hotels per night stay (perhaps 5 euro), preserve for another year
of the property tax, an increase on luxury tax (i.e. artworks, jewelry), an
increase on luxury tax (cars, swimming pools), maintain the special
contribution tax for income over 50,000 euros, freeze the increase in the
minimum wage salary, and instead of giving an annual 13th salary (christmas bonus),
make it a one-time bonus. Finally the tax of 6.5% will probably remain on
books, magazines, medicine, and theaters.
Unfortunately the scandals are continuing to surface,
as the Agricultural Insurance Organization, discovered yesterday of monkey
pensions to foreigners claiming having minor children. The children did not
exist as individuals, and those receiving pensions were even out of the
country.
Greece is not in a position to directly borough from
the markets, as this will cost dearly Cyprus did manage in just two years,
after also entering the IMF, to borough from the markets. Of course this is
political will and determination, something that Greek politicians do not have.
Therefore Greece needs the help of financing from its EU partners. Yesterday the ECB decided to release another installment payment, and increased funding by 1.1 billion Euros from the ELA, to fund the Greek banks. It is the minimum amount required for operations Greece will
remain stuck to leftist politics, rehiring public servants (when in fact they
acknowledge cash his running out), instead of trying to clean up the public
mess.
Bill T. Alexandratos
