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Pensions, taxes and non-performing loans hinder negotiations with creditors

16 February 2016 / 13:02:39  GRReporter
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The first monitoring on the implementation of the third rescue programme should be completed very soon is the message sent by the European Central Bank president Mario Draghi, according to whom the completion of the process depends on critical issues such as the pension reform, taxation changes and the implementation of the agreement on the settlement of non-performing loans. Regarding the pension changes, he said that the burden should be shared between generations, which in fact means that the pensions of today's pensioners should be as well affected and which the Greek government is seeking to avoid.

Last week’s article by the director of the European office of the International Monetary Fund Poul Thomsen yesterday provoked statements on the progress of negotiations with Athens, on the part of Mario Draghi and the European Commission. Its spokesman Margaritis Schinas said, "The European Commission will do everything possible to quickly complete the monitoring," but added that "it does not depend only on us." According to the commentators, his words were addressed to both the Greek government and the International Monetary Fund. Some analysts claim that the European Commission does no fully support the hard line of the International Monetary Fund in the negotiations with the Greek government.

Schinas described as "constructive" the discussions between the creditor representatives and the Greek ministers that took place in Athens a week ago. He added that they were working intensively so that the heads of creditor institutions return to Athens "as soon as possible" in order for an agreement on a technical level to be reached "in the coming weeks."

The Greek Ministry of Finance reported that the heads of institutions would probably arrive in Athens in the coming weekend to begin consultations with the government on Monday. According to the Greek media, however, this is not very likely to happen. Creditors in turn also said that the heads of institutions would probably arrive in Athens next week but the exact date would have to be specified.

In any case, according to Mario Draghi, the fast completion of the monitoring is as important as carrying it under conditions of trust. As reported by the Greek newspaper Kathimerini, the two sides are already discussing the issues described by him in the negotiations.

In particular, concerning the pension reform, the Greek government has sent the details of its proposals regarding the proposed measures and creditors are now considering them. According to them, amendments are required to achieve the budgetary target to reduce pension costs by 1 per cent of GDP in 2016.

In terms of the tax reform, Athens has submitted its proposals for the income tax changes but creditors do not agree with them. Therefore, Mario Draghi has urged the Greek government to take action on the taxation of income.

In connection with non-performing loans, the European Central Bank President has called on the government in Athens to make "real effort" to implement the framework agreed on the settlement of loans in the red. Draghi stressed that it is critical to settle this issue in order for the monitoring to be completed. According to the sources referred to by Kathimerini, creditors propose that serviced bank loans be sold too.

Tags: PoliticsNegotiations with creditorsMonitoring on the third rescue programmeMario DraghiPension reformTax reformNon-performing loans
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