ESM approves disbursement of EUR 2 bln to Athens

ESM approves disbursement of EUR 2 bln to Athens

Athens, November 24, 2015/Independent Balkan News Agency

By Zacharias Petrou

The European Stability Mechanism (ESM), which convened on Monday, gave the go-ahead for the disbursement of 2 billion euros in bailout loans for Greece following the successful implementation of 48 prior actions.

“This decision follows the Greek government’s completion of the first set of milestones,” the euro zone bailout fund said in a statement.

“The disbursement approved today will primarily be used for debt service, as well as for arrears clearance and co-financing projects funded by EU structural funds.”

Furthermore, the prior actions required for the disbursement of another sub-tranche of bailout cash amounting to 1 billion euros will be examined by the Greek government officials and the representatives of the country’s creditors.

According to press reports, the institutions gave Athens the list of measures they would like to be adopted and the government is already reviewing them.

The aim is for the representatives of the four institutions to return to Athens in two weeks to review progress. However, it is not expected that the process will be completed before Christmas. This means the first complete review of the third bailout program will likely take place early next year.

The next set of measures Greece must implement includes unpopular social security reform, a new salary system in the civil service and the abolition of a series of tax breaks (for farmers, households, etc.). Property tax will also be reformed to target assets abroad with the aim of collecting 2.65 billion euros in 2016 overall. The following measures will also be required:

  • agreement on the settlement of non-performing bank loans,
  • creation of a new public revenue service,
  • formation of a task force that will be responsible for setting up a new state asset fund,
  • adoption of the product market reforms recommended by the Organization for Economic Cooperation and     Development (OECD),
  • privatization of electricity grid operator ADMIE.

However, Finance ministry sources told the Athens News Agency on Monday that there three issues have been identified that will not be included in the second set of prior actions needed for the disbursement of the 1.0 billion euros sub-installment.

According to the same sources, those are: raising tax rates for farmers, introducing new tax scales on rent income and integrating an extra contribution tax on income tax scale.

Athens is apparently keen to gradually push through the required prior actions which include some highly unpopular measures. That way, if the discussion of some issues is postponed to 2016, the coalition government could avoid losing more MPs during the ratification of the measures in parliament.

In an interview on Sunday, Prime Minister Alexis Tsipras called for an open inter-party dialogue on all major issues of national interest (i.e. social security reform, refugee crisis, constitutional review, etc.).

The comment has fueled speculation that Tsipras is reaching out to the opposition after losing two MPs in the latest prior action vote in parliament.

Reports suggest Tsipras would like perhaps to achieve consensus and support mainly from PASOK and Enosi Kentroon – the two opposition parties closest to Syriza – in upcoming votes of specific reforms in parliament. In fact he is considering one-on-one talks with opposition party leaders or calling an all-party meeting that will be chaired by Greek President Procopis Pavlopoulos.