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The Weekend Neos Kosmos : 16 April 2016
DIGITAL.NEOSKOSMOS.COM THE WEEKEND NEOS KOSMOS | SATURDAY 16 APRIL 2016 3 NEWS cy, contrary to the government's previous plans for it to be supervised by the Ministry of Finance and in the context of safeguarding financial stability, the Bank of Greece will be granted additional supervisory powers over Greek banks, including the monitoring of solvency and liquidity and the assessment of their performance. The agreement explicitly sees to readjustments of the program's goals so as to offset the fiscal impact of the refugee issue, but it remains a question whether such major changes can be implemented amidst an already tumultuous situation. What kind of pension reforms are suggested? Pensions will be recalculated, introducing a national pension of €345 a month for 15 years of documented labour and contributions and €384 for 20 years. Τhe poor pensioners solidarity benefit, EKAS, will be gradually phased out, to be abolished by the end of 2019, along with any other additional subsidies. The savings from this process will be directed towards the introduction of a Guaranteed Minimum Income in June, a measure that has been advocated by various political parties in recent years. To tackle further pension fund deficits, Greece should implement measures worth another 0.5 per cent of GDP but without including any more cuts to its main pensions which would be frozen. The SYRIZA government has been reluctant to agree on this reform, as it does not want to hurt the country's 2.7 million pensioners any more, having seen their monthly stipends cut 11 times since 2010. Are wages also being reduced? SYRIZA can officially bury its plan to reinstate minimum wages to pre-crisis levels. The draft binds the government to the legislation passed in 2013, specifically prohibiting "a return to past policy settings". Labour issues have also entered into the agreement. A new Labour Law Code has to be implemented by the end of 2016, preceded by the government's commitment to line up legislation on collective dismissals, strikes and bargaining with "best practice in the EU". Does this mean lay-offs in the public sector? This is not clearly stated, but a new framework for the civil service is bound to be established. It includes performance assessment for public sector workers, reduction of wages and benefits and new law, regulating the way managerial positions would be open to outsider contestants. How will the taxation system be affected? Readjusting tax income brackets and lowering the tax-free threshold was discussed. The ‘new’ memorandum draft suggest a vast reform of personal income taxation in order to yield profits equal to one per cent of Greece's GDP, as it will broaden the tax-paying base of wage-earners, 55 per cent of whom are now exempt from any tax. The tax-free income threshold will be lowered to €8,812 p.a. (it currently stands at €9,545). A higher tax rate will be imposed on electricity and other utilities, while books, magazines and entertainment services will enter the middle strata of the VAT scale. ENFIA, the controversial housing tax that was introduced in 2014 will be restructured, so as to balance the loss from the coming readjustment of zone prices that aims at reflecting current market values for real estate. The farming industry will now be taxed on the sum of the farmer's income, including subsidies, and the definition of the professional farmer will tighten for tax purposes. What about the ‘red’ loans? Non-performing loans, claim a large part of the draft, with lenders urging for the liberalisation of the loan market as part of measures to reduce the volume of ‘red’ loans. Athens is to amend its legislation to allow the sale of non-performing and performing bank loans by non-banks "freely and immediately". The according legislation should be passed before 2017 and implemented gradually; the plan is for ‘red loans’ to be personified according to each debtor's capability to pay, assisted by a framework for handling larger debts and a plan of reductions for social security debts. Any progress on the privatisations field? Privatisations also take a significant part of the drafted agreement. The IMF urges the Greek government to endorse immediately a plan of privatisation of 27 assets via the Asset Development Fund (TAIPED); in addition to that, a new independent authority, supervised by the EU, is to be established, managing assets that are to go through privatisation. Among the priorities is the finalisation of a series of deals, including the airport of Hellinikon, Thessaloniki port authority and the remaining obligations on the port of Piraeus and the 14 regional airports. Privatisation plans are to be extended to include utilities; the draft implies the selling of the electricity provider's stocks and a five-year business plan to be implemented on the two major water providers, for Athens and Thessaloniki. Why is the April 22 deadline important? Prime Minister Alexis Tsipras, who has a fragile parliamentary majority, is aiming for a compromise before the eurozone finance ministers' meeting on 22 April. He hopes that a positive review will appease the markets and coax back investors, while a debt restructuring will convince Greeks that their sacrifices are paying off after six years of belt-tightening. It will also unlock €5 billion in aid. Athens needs the money to repay €3.5 billion to the IMF and the European Central Bank in July, as well as unpaid domestic bills. The EU, on its part, is keen on resolving the issue as quickly as possible, having to cope with a huge refugee crisis, with Greece at its epicentre. How are things expected to unfold from now on? Given the SYRIZA government's fragile majority, a new round of social and political turmoil should be expected. The Greek government is trying to gain time, in anticipation of events, having already stated that it will submit two bills on tax and pension reform to the parliament next week, despite the deal not having been reached yet. "The legislation will be passed by the end of the month and there is time to make adjustments," said the Finance Minister, Euclid Tsakalotos, in a joint statement with the Minister of Labour, Giorgos Katrougalos, suggesting that Greece, being a sovereign country, will have "the last word", even if it needs "to listen to the opinion of the institutions". This turn of events apparently took creditors by surprise as neither the two ministers nor Prime Minister Alexis Tsipras had informed them of their intentions. The usual procedure is for the content of the legislation to be agreed between the government and the institutions; then eurozone finance ministers give their blessing and finally, the bill is debated and voted on in the Greek Parliament. Analysts see this unilateral move as an attempt from the Greek side to exert pressure on the creditors to wrap up the first review of the country's third bailout by the end of the month so as to avoid the scenario of negotiations extending into June. Sources: Athens Live, The TOC, The Press Project, Kathimerini Greek Minister of Labour Georgios Katrougalos PHOTO: EURANET CITIZEN’S CORNER.
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23 April 2016