Greece, Creditors Said to Need a Few More Days to Reach Aid Pact
Update: Greece and its European Union creditors need a few more days to reach an agreement that would release an aid payment of 2 billion euros ($2.2 billion), according to an EU official with knowledge of the talks.
The two sides need to resolve several issues, including how to deal with housing foreclosures, said the official, who asked not to be identified because the talks are private. The Greeks are seeking a system that would shield about 70 percent of homeowners from foreclosure, according to two other European officials.
Auditors from the International Monetary Fund, the European Commission, the European Stability Mechanism and the European Central Bank say the Greek limit is overly generous and are seeking a stricter framework that would only cover the most vulnerable.
Euro-area finance ministers will meet on Monday in Brussels to review the implementation of Greece’s latest bailout program and whether the nation is meeting certain milestones required for the disbursement of aid and the recapitalization of its banks. Failure to complete the review could put the solvency of the sovereign and of its financial system in doubt.
“I’m going to Brussels with the spirit that an agreement should be achieved this afternoon,” French Finance Minister Michel Sapin said at a press conference on Monday in Paris. “This will allow bank recapitalization and for the sums due to Greece to be paid.”
The meeting is scheduled to begin at 3 p.m. in Brussels.
Source: Bloomberg – Greece,Creditors Said to Need a Few More Days to Reach Aid Pact
Actions ahead of Eurogroup
The Greek government was in contact with its lenders over the weekend as part of a last-ditch attempt to reach an agreement on pending actions by the time eurozone finance ministers meet in Brussels on Monday.
The chances of the Eurogroup approving the disbursal of the 2-billion-euro sub-tranche appear very slim, meaning that probably the best Athens can hope for is for the meeting to end on a positive note and with an agreement in principle between the government and the institutions on what steps need to be taken in the coming days to conclude the prior actions.
The key issues being discussed over the weekend were the criteria that apply to home repossessions, the rules governing the 100-installment payment plan for unpaid taxes and the coalition’s continuing efforts to find a fiscal measure to replace the 23 percent value-added tax rate on private education, which it agreed in the summer but has since pledged to scrap.
On the issue of primary residence repossessions, the Greek government is trying to find a formula that would protect at least half of local homeowners, compared to the proposal from the institutions, which would lead to just 20 percent not facing the threat of losing their home if they do not keep up with their mortgage repayments.
The two sides’ positions on the installment scheme, which allows taxpayers who have amassed debts to the state to pay them off in up to 100 tranches, also differ substantially. Greece’s lenders want those who enroll in the scheme to be removed from it if they miss a payment by more than a day, compared to the current 26-day grace period they have been given. Athens is mulling the possibility of gradually reducing the limit from 26 days and linking it to the performance of the country’s economy.
The government believes it has found a solution for raising the revenue that a 23 percent VAT rate on education would have brought in by increasing the tax on gambling.
However, should there not be a common position at the Eurogroup, this could have a knock-on effect for the recapitalization of Greek banks. A delay in agreeing the remaining prior actions needed for the disbursement of the 2 billion euros would delay the drafting of another multi-bill with provisions relating to the recapitalization, which has to take place until the end of the year, otherwise rules regarding the bail-in of depositors will kick in.
Source: ekathimerini – Greece and lenders discuss actions ahead of Eurogroup
