Galery

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According to a senior European official, structural changes should be accelerated, especially in terms of employment of civil servants, public administration, tax reforms and opening of closed professions where there is still resistance by organised interests.

The same official talked about delays in tax revenues and certain cost overruns in the health sector and noted that Greek authorities have agreed to apply 20 structural measures in order to solve the problem. He explained that a limit on pharmaceutical expenditure was envisaged in 2013 and the Health Insurance Fund will indemnify only according to that limit.

As for the public sector, it has marked certain progress in terms of quantity, but still needs to develop in terms of quality. From the end of 2010 until 2012, 120,000 people left their job in the sector. This is the majority of the total of 150, 000 employees who need to leave by the end of 2015. The official said that, 12,500 other employees will have to be involved in the mobility plan by the end of September, so that the target of 25,000 could be achieved by the end of the year. As for the transfer of 4,200 government officials, he revealed that the government informed them on Tuesday that the law will need to be changed. As far as employees are concerned, they will be accredited and if they have skills for other sectors they will be transferred. Those who fail to pass the tests and cannot find work in other sectors will be laid off. The Commission’s headquarters has expressed concern about the development in terms of justice where there is a long delay in issuing verdicts.

VAT reduction

As for the reduction of VAT in restaurants, the source stressed that the overall financial situation, which is positive, allows the implementation of the measure provisionally as of 1 August until the end of the year and the cost of this measure will be covered by defence spending.

He also said that a reform in taxation of real estate was expected in the autumn, which will replace existing legislation.

Regarding the development of privatisation, the European official said that progress has been marked at the National lottery OPAP and the National Gas Transmission Company, but not at the National Gas Company, and mentioned that targets for 2013 will not be achieved and the gap that will occur will need to be closed in 2014. He estimated that this year’s privatisation shortage will reach 1 billion euro and could be covered by speeding up procedures for railways and ports, and stressed that the goal for 2020 is 50 billion euro.

He attributed the failure to meet targets and lack of international interest to cautiousness which existed until recently and was associated with Greece’s possible exit from the Eurozone.

Banks

As for developments in the banking sector, the EC official said that the recapitalisation of the four major banks was completed and they are now expected to support the economic recovery with an increase in lending.

He added that by the end of September, banks will have to submit their restructuring plans to the Commission, and by the end of the year, stress-tests will be carried out, the results of which will be known in early 2014.

Unemployment

Unemployment is the main problem. It has reached 27% and measures are being taken for the creation of programmes for about 50,000 unemployed in the second half of 2013 with funding from EU Structural Funds, as well as programmes for 350,000 young people.

The improvement in the fiscal adjustment is a positive element. The EC official said that primary deficit was 1.3% in 2012, which is better than the 1.5% estimated by the Commission, while according to June data, the official admitted that "Greece is on the right track" in 2013.

Optimism

The source of the European Commission expressed his belief that the progress in the implementation of the programme will have a positive turn with the increase of investments not only from the European Union, but also from third countries such as Russia and China. He stressed that there is a funding gap in the programme, estimated at 3.8 - 4 billion euro by the end of 2014, which comes mainly from the refusal of the Eurozone’s central banks to extend the maturity of certain bonds - an issue that is expected to be resolved this autumn. In any case, this gap can be closed in various ways, either by new loans or expected reserves of bank recapitalisation.