The political direction of the Greek government is clear and will remain unchanged, something that was reflected in the draft budget of 2019, which was tabled yesterday in the Greek Parliament.
Although it includes two scenarios (one with the pension cuts and the counter-measures and one without them but with the 1.1 billion euro announcements of Tsipras), the government has made clear that “the (pension cuts) measure is not necessary.”
According to government sources, the Greek leadership intends to send the draft to the Commission on October 15, without the pension cuts and the relevant countermeasures so that the other side can judge it on this base. In any case, the final draft budget to be tabled in Parliament on 20-21 November is what will be the basis of whatever (final) decision is made. Indeed, it is highly likely that there will be changes in December.
However, consultation with the Europeans might take place until November, as the legislative mapping of both the abolition and the positive measures which are a result of the fiscal space created for 2019 should also be done.
If the specific budgetary insertions have not been legislated, they can not be included in the final draft budget, and they are less likely to be included in the voted budget. Therefore, legislative insertions are necessary in order to determine the specific fiscal insertions that will be made before the final voting on the budget.
In case everything goes smoothly, there will be no issues whatsoever. However, if the German side – for example – wants the opposite, it could “block” the first tranche of the national central banks’ return on the holding of Greek bonds (the so-called “SMP’s / ANFA’s”. At the same time, this could temporarily upset the markets.
This is considered by some to be manageable due to the 24 billion-euro cushion…. / IBNA