Government: The agreement provides for a “mild adjustment” in the budget

Government: The agreement provides for a “mild adjustment” in the budget

Athens, August 12, 2015/ Independent Balkan News Agency

By Spiros Sideris

The agreement on fiscal issues provides for mild adjustment, it is not at all suffocating, leaving space for growth, said government sources, referring on the key points of the agreement, noting, inter alia, that it will not bring additional financial burdens, namely new measures in the near future.

In addition, the Agreement provides not only for the refinancing of the debt until the first half of 2018, but also enough money to repay arrears of the government, in order to bring “fresh” money to the market.

The same sources indicate that the recapitalization of banks by the end of 2015 and their direct support, with at least EUR 10 billion, there is no longer any risk whatsoever of a “haircut” of deposits.

Still, the government did not accept for “red loans” to be sold to companies, while a legislation protects the first residence from auctions by the end of 2015.

It is being announced that in autumn there will be government initiatives to settle permanently the “red loans” that amount to EUR 95 billion. For this reason, there will be a consultation group with the institutions.

They also point out that the agreement still provides for a development package of EUR 35 billion (Juncker package). Furthermore, the agreement, as reported by government sources, provides for the privatisation fund, through which the public property won’t do up for sale, as in HRADF, but will be exploited.

Specifically, the government sources said:

  1. The Agreement on budgetary issues provides for a mild adjustment, not at all stifling, leaving room for growth. More specifically, it provides: -0.25% primary deficit in 2015 and surpluses of + 0.50% in 2016, + 1.75% in 2017 and + 3.5% in 2018.

It is reminded that the agreement signed by the Samaras/Venizelos government foresaw primary surpluses of 3% for 2015, 4.5% for 2016 and 2017 and 4.2% in 2018! Surpluses that leave no room for development.

With this Agreement, the obligations of Greece surpluses in 3 years is reduced by 11% of the GDP, thus avoiding measures around EUR 20 billion.

This means that with this agreement there will be no new financial burdens – that is no new measures – in the coming period.

  1. The Agreement shall be governed by the International and European Law rather than the English, as had been agreed by the Government of New Democracy and PASOK, and does not provide for the repeal of state immunity, as was provided for in the previous agreements.
  2. The Agreement provides not only the debt refinancing until the first half of 2018, but also enough money to repay arrears of the public to be “fresh” money market. A move that will revitalise the commercial world.
  3. Banks will be recapitalised by the end of 2015 and will immediately strengthened to at least EUR 10 billion. As such, there is now no risk of a “haircut” of deposits, as is provided by the EU directive on recapitalisation of banks after 01.01.2016.
  4. The government refused to sell the “red loans” to companies, while legislation has protected the first residence of the auctions by the end of 2015. In the autumn there will be government initiatives to settle the matter permanently, as far as this can be made possible in a “market” of about EUR 95 billion, as are the “red loans”. For this reason, there will be a consultation group with the institutions.
  5. The ITSO remains a public good, while there was no reference to a “small PPC”. There is, of course, commitment to liberate of the gas market, but this is in any case an obligation to adapt to European directives.
  6. We remind that the agreement still provides for a development package of EUR 35 billion, known as the “Juncker package”!
  7. After the government’s proposal, the labour market was also put on the negotiation’s table and was decided that consultations with the institutions to promote the legal regulations, to start in the near future. It should be noted, however, that the consultations will take place in collaboration with the International Labour Office – ILO and with experts of international repute, which ensures that Greece will not be except from what is in force in Western Europe.
  8. Citizens will continue not to pay 5 euros for examinations in hospital outpatient clinics.
  9. The measures provided for in this Agreement are the same – albeit with several improvements – foreseen in the ND/PASOK government agreement that was not implemented. In that agreement, the government was obliged to implement these measures in order to complete the fifth assessment and ensure funding of EUR 4 billion.

The same measures, more or less, were introduced to the proposal submitted by the institutions in the Eurogroup meeting of June 25, accompanied by a five months extension of the program and funding of EUR 7 billion.

Today, with the same measures, but with significant improvements, after the negotiation, the country has secured the payment of its debt obligations and arrears for the next three years, with funding of around EUR 85 billion.

  1. The Agreement provides for the privatisation fund through which the public property does not go up for sale, as in HRADF, but is exploited.