Speaking to Greek media on Thursday, Finance Ministry sources confirmed that talks with the inspectors representing the country’s official lenders have culminated in an agreement to reduce pensions in January 2019 as agreed, and slash the income tax-free threshold in 2020.
According to the same sources, the International Monetary Fund has not insisted on bringing forward the reduction of the tax-free threshold as was initially feared. As a result, the Greek government expects to arrive at a Staff Level Agreement swiftly, perhaps even as early as Saturday.
It also appears that the International Monetary Fund has agreed to revise its projections for the 2018 primary surplus, from 2.9% to 3.5%. Athens hopes that this development could allow it to reduce some of the taxes deemed to be excessively high, although it is not yet clear which obligations could be lowered.
Remaining stumbling blocks reportedly include delays in the selection of new general secretaries for Greek ministries, over which the government was warned by troika representatives.
Outstanding issues include aspects of the privatizations program, namely delays with Egnatia Odos and Athens International Airport, as well as the sale of 17 percent of the Public Power Corporation and the development of Elliniko. These issues are now expected to be re-examined in the post-bailout period.
Senior Finance Ministry sources also confirmed that Greece will cut its projected economic growth rate this year to 2.0-2.1 percent from a previous 2.5 percent forecast. However, it was pointed out that this does not necessarily mean that growth cannot turn out higher.
The yield of the 10-year Greek bond rose 2.91 percent to 4.5 percent on Thursday. Analysts point out the jump should be attributed to political uncertainty in neighboring Italy where anti-European parties are expected to rise to power…. / IBNA