EWG withholds 2-bln-euro tranche without private school VAT hikes or foreclosures

The Greek government did all it could to end open fronts with its creditors by submitted an omnibus bill of laws to be voted through in fast-track procedures on Thursday afternoon. The bill is to be discussed on Monday, however not in time for the Euro Working Group to disburse the 2-bln-euro tranche benchmarked for Greece at its meeting on Thursday.

The funds were to have been injected into Greece’s suffering economy by Friday, but Thursday night’s Eurogroup found that Greece had not covered its pledges to ensure their release. Hence, all discussion of these rescue funds, necessary for the recapitalization of Greek banks is to be postponed for the Eurogroup meeting on November 9 at the latest.

An EU official pointed in two “thorny” issues in negotiations with Brussels at the end of the Euro Working Group meeting at Friday dawn. He said that outstanding issues still need to be resolved, especially those concerning foreclosures of primary residences and VAT tax to private education. He stressed that there is a chance that the 2-billion-euros that Greece needs may be disbursed at the end of next week. Nonetheless, he said that this would depend on Greek authorities. The sooner that prior actions are implemented, the greater the likelihood for funds after the results of the stress tests for Greek banks are announced on Saturday.

Meanwhile, the omnibus bill submitted to Parliament on Thursday contains a number of thorny issues, such as VAT rates for private education, foreclosures of primary residences and changes to the administration of pharmacies. Another contentious issue is the decision to bring 640 acres from the coastal zone at the region of Lipasmata at Drapetsona to the jurisdiction of municipalities of the Piraeus region, a matter where representatives of Greece’s creditors (European Commission, European Central Bank, International Monetary Fund, European Stability Mechanism) have expressed reservations as it would affect tenders in progress by the Hellenic Republic Assets Development Fund (HRADF-TAIPED) for the Port.

The 146 pages of the omnibus bill covers nearly all of the prior actions required by the government whereas political agreement is required for other outstanding matters. The first clause of the multi-bill will change social security laws (again) and reformulate a provision passed ten days ago with Law 4337 under the first package of prerequisites.

Pensioners who submitted their retirement forms from January 1, 2015, through to August 31, 2015, will find that the new calculations for pensions in the public sector will also apply to them retroactively, essentially equalizing their benefits to those of retirees who submitted their forms from September 2015 onwards. The new regulations will not apply to those who had submitted their retirement applications before 2014.

Other changes, include:

– Land areas that are not on the town-planning grid are excluded from the assets criteria of 150,000 euros, hence those who owe money can still repay in interest-free installment rates (for debts of of up to 5,000 euros  to the tax office).

– Increases to the excise duty on farm diesel from 66 euros to 200 euros per kiloliter, applicable for the period from October 1, 2015, through to September 30, 2016.

– The transfer of 500 positions from the Tax Office to the General Secretariat of Public Revenue

– Tax and customs cases to be transfered from the Tax Office to the General Secretariat of Public revenue will increase from 3,500 to 4,020

– Energy effectiveness regulations change

– Increased beer tax for Small and Medium-sized Breweries from 2016

Noteworthy is the fact that German Finance Minister Wolfgang Schaeuble believes that the program for the recapitalization of Greek banks should be linked with the first review, whereas this is not the case for European Commission President Mario Draghi. Euroepan Commission Vice President Valdis Dombrovskis who visited Athens on Monday and Tuesday aligned his views with those of Schauble.  On his part, EU Economic and Monetary Commissioner Pierre Moscovici stressed that Greece should make some “important and hard” decisions by the end of the year.