Athens, April 30, 2015/ Independent Balkan News Agency
By Zacharias Petrou
The cabinet discussed the proposed provisions of a multi-bill being drafted by a new “political negotiating team” and which is expected to recommend changes to Greece’s public sector and tax administration but not to tackle key areas of contention such as pensions and the labor market.
Government officials indicate that the Greek side’s “red lines” would remain in place, noting however that the provisions have not been “written in stone.”
The thorny issues of pension and labor sector reforms, along with privatizations and the size of this year’s primary surplus target, were expected to dominate talks in Brussels, however, as creditors are keen for progress in some of these areas.
Finance Minister Yanis Varoufakis said Thursday that the government is not prepared to slash supplementary pensions or raise VAT. However, he added some of these issues may be discussed again in June. “I’d like to see VAT set at 15%”, Varoufakis told “Sto Kokkino” radio station.
The minister said he expected a deal to be reached with creditors by May 15.
Responding to a question on the unified property tax (ENFIA), Varoufakis said the government intended to abolish it but has decided not to in order to help along negotiations with the country’s lenders.
Moreover, a non-paper clarified that the government will not be backing down from the “red lines” it has set. This declaration comes just a few hours after the leaks from the finance ministry on measures concerning VAT, the 13th bonus pension, and cuts to auxiliary pensions.
The head of the Eurogroup warned Greece that Europe is prepared for various outcomes to the standoff between Greece and its creditors.
Jeroen Dijsselbloem, who heads the group of finance ministers of countries that use the euro, had been asked whether there is a “plan B” for Greece.
“The question is the Netherlands prepared, or is the Eurozone prepared for eventualities, the answer to that is: ‘yes’,” Dijsselbloem said.
A poll by GPO for Mega TV indicated that 78.1 percent of Greeks want there to be an agreement, rather than a rift, with lenders. A similar percentage wants Greece to stay in the euro “at all costs.” The idea that the government should hold a referendum or snap elections if it has to cross its “red lines” to reach a deal is supported only by a minority, according to the survey.
Moody’s downgraded Greece’s government bond rating to Caa2 from Caa1, with a negative outlook late on Wednesday.
Moody’s said the key reasons for the downgrade are the “high uncertainty over whether Greece’s government will reach an agreement with official creditors in time to meet upcoming repayments on marketable debt” and the «significant implementation risks of a follow-up, medium-term financing program even if an agreement is reached, given the weakened economy and a fragile domestic political environment.” A ‘Caa2’ government bond rating is historically associated with a roughly one in four probability of default over a two-year horizon.