ATHENS – Unsatisfied with Greek proposals, the country’s international lenders told the government to go back to the drawing board and come up with better ideas if it wants an early exit from bailout deals.
The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) has held off coming back to Athens to check on reforms progress until Prime Minister Antonis Samaras’ coalition government finds a way to fill a 2015 budget gap of two to three billion euros.
Without the Troika sign-off, Samaras, the New Democracy Conservative leader, can’t pursue getting out from under the austerity measures attached to 240 billion euros ($306 billion) in two rescue packages.
Greece had proposed setting a retirement age of 62 and doubling the hotel room Value Added Tax from 6.5 percent to 13 percent, two years after reducing it from 13 to 6.5 percent, a move that helped trigger a comeback in the tourism sector, the country’s most important revenue engine. Hoteliers and tourism officials said a doubled tax would kill that recovery.
It was not clear if Greece was preparing a response but the delays make it seem unlikely the government will be able to strike a deal before a Dec. 8 meeting of Eurozone officials where it hoped to make a case to get a precautionary credit line and stop taking IMF loans up to 2016. The EU monies run out at the end of the month.
It now seems certain that the government will have to agree to an extension the Troika memorandum, which could give ammunition to the poll-leading major opposition Coalition of the Radical Left (SYRIZA) which hopes to thwart the ruling parties’ choice of a candidate for Greek President in February, 2015 to force early national elections.
SYRIZA leader Alexis Tsipras said if he comes to power he would seek to revise the pay cuts, tax hikes, slashed pensions, worker firings and privatization program that came with the bailouts or walk away from the debt, essentially leaving Greece broke and unable to return to the markets. He hasn’t said how he would govern without money.
According to Troika representatives, the two sides were now closer to an agreement but differences remained. Sources told Kathimerini that the two sides were going to stay at it although the IMF has said it wants additional tough measures, which Samaras has rejected, including more pension cuts.
“We are ready for a final agreement and we can achieve it if everyone really wants to move on,” Samaras said. “I cannot accept unreasonable demands. We are at the end of 2014 and nobody has the right to treat us like they did two-and-a-half or four years ago, when everything was collapsing.”
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