Despite producing several vague outlines as reform offers, the lists aren’t satisfying international lenders, nor many in the world press.
Greece Threatens Default, Fresh Reform Bid Falters
The Telegraph – Mehreen Khan
The Greek government has threatened to default on its loans to the International Monetary Fund, as Athens continued its battle to convince creditors for a fresh injection of bail-out cash.
Greece’s interior minister told Germany’s Spiegel magazine, his country would not respect a looming €450m loan repayment to the fund on April 9, without a release of much-needed bail-out funds.
“If no money is flowing on April 9, we will first determine the salaries and pensions paid here in Greece and then ask our partners abroad to achieve consensus that we will not pay €450 million to the IMF on time,” said Nikos Voutzis.
The cash-strapped government has struggled to keep up with its wage and pensions obligations having agreed a bail-out extension on February 20.
Athens insists it has enough money to last it until the middle of April, but a final agreement on any bail-out deal is unlikely to be secured before the end of the month.
A Greek government spokesperson later denied the reports of a deliberate default, saying the country still hoped for a “positive outcome” to its debt negotiations.
The comments came as the eurozone’s working group discussed a new 26-page plan of reforms from Athens on Wednesday.
Aiming to generate an estimated €6bn in 2015, Athens has submitted a range of revenue-raising measures including cracking down on tax evasion, carrying out an audit on overseas bank transfers, and introducing a “luxury tax”.
The document also warned brinkmanship on the part of the eurozone meant the “viability” of the currency union was now “in question.”
Greece Submits New List of Reforms to Eurozone
Financial Times – Peter Spiegel
Greece on Wednesday submitted a fresh list of economic reforms to eurozone authorities, estimating the measures could raise as much as €6bn this year. It is the cash-strapped government’s most comprehensive effort so far to unlock €7.2bn in bailout funds before it goes bankrupt.
The 26-page document, obtained by the Financial Times, relies on plans to crack down on tax evasion and fraud to raise most of the revenues. These include €875m from audits of offshore bank transfers and €600m from a new lottery scheme aimed at compelling consumers to demand value added tax receipts.
The tenor of talks between Athens and its international bailout inspectors — the European Commission, European Central Bank and International Monetary Fund — has improved in recent days, and Greek officials have expressed hope that they could reach an agreement on the measures as soon as next week.
“The larger purpose of this document is, in the first instance, to unlock short-term financing that will permit the Greek government to meet its immediate obligations,” the document states in a short introduction. “The Hellenic Republic considers itself to be a proud and indefeasible member of the European Union and an irrevocable member of the eurozone.”
Greece and its Creditors Starting to List
ONCE again, Greece’s new left-wing government has handed a list of reforms to other euro-zone governments and the IMF in the hope of securing the next dollop of the country’s bail-out. The list was due to be reviewed by senior euro-zone financial officials on April 1st, after The Economist had gone to press, but the initial reaction was dismissive.
Some of the iciest comments concern pensions. Greek spending on them is the highest in Europe as a share of GDP, an astonishing 17.5% in 2012. That contrasts, for example, with expenditure worth 12.3% of GDP in Germany, Greece’s main creditor. It is double the share of GDP that goes to them in Slovakia, one of Greece’s fiercest critics.
Lavish spending on Greek pensions has been a source of acrimony with northern creditor nations ever since Greece was first rescued, almost five years ago. Germany had only recently pushed through a pension reform raising the retirement age from 65 to 67 between 2012 and 2029.
That made Germans ill-disposed to dip into their pockets to help a country whose workers were able to retire much earlier on generous pensions. Slovakia, a poorer nation than Greece, pulled out of the first bail-out in the summer of 2010 in response to public anger at the prospect of subsidising Mediterranean spendthrifts.
In fact, a series of reforms in Greece have restricted pension spending. A big overhaul in 2010 slashed prospective promises that would have caused pension expenditure to vault to 25% of GDP by 2050. The retirement age was raised to 67 for men and women from 2013.
The “replacement rate”—the value of the pension in relation to prior earnings—was reduced from 96% for average earners, the second-highest in the OECD, a club mainly of rich countries, to 54% in 2012. And pensions have been cut by eliminating two annual bonuses.
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