The first were the Chinese. Then was Goldman Sachs followed by the German banks. Now is the turn of Hayman Private Equity LLC. This unknown American private investment fund with head office in Boston, USA wants to buy 20 milliard Euros of the Greek state debt. The fund has contacted the Greek government through an attorney from Athens and sent three official letters with offers. The first one is dated January 11, 2010 and addressed to the Prime Minister Geórgios Papandréou. With this letter Hayman Private Equity LLC declares its wish to buy 7 milliard Euros of the Greek state debt. The fund offers floating interest based on Libor plus 1.25 per cent which is equal to interest of approximately 2 per cent. On February 2, 2010 the investment fund has sent a new letter offering to buy 20 milliard Euros as well as to collaborate with Post Bank. The analyzers are not familiar with this fund and they are sceptical about its real goals and why the information about its offer is announced now.
It is not a secret that the Greek government urgently needs cash. The Ministry of Finance has undertaken three new measures effective from today in order to immediately strengthen the revenues of the state budget that are far behind the Stability Programme with 796 million Euros. For a start it freezes the VAT refunding to the companies for another 4 months to September 30. By order of the Financial Minister Giorgos Papakonstantinou the tax offices will not refund the VAT before the conclusion of a regular or temporary tax examination of the companies. All business circles are against this decision because the non-refunded VAT will make their liquid position still more difficult.
The statistical data shows that the refunded VAT has registered an annual growth of 3 per cent so far while now it registers a drop of 26.7 per cent. Thus, the non-refunded taxes delusively have improved the state of the budget revenues that register an increase of 10 per cent. The revenue increase set in the Stability Programme, however, is 11.7 per cent. So, the revenues are 243 million Euros less. In fact, the difference is more serious, because the regular revenues before tax refunding have increased only by 6 per cent, not by 10.9 per cent as the Stability Programme envisages. Thus the real difference is 796 million Euros.
Secondly, the government reschedules the deadline for payment of due taxes – VAT, income tax, etc. – to the end of June. This will allow 800 000 incorrect debtors to pay their debts in full or to pay at least 50 per cent of the due taxes without penalties for delaying their payment. After this deadline the state will impose penalties on the improper debtors by confiscating their real estates and bank accounts. Those taxpayers that have failed to submit their income tax form or submitted forms with incorrect data have the opportunity to correct them without penalty till the end of June.
In the third place, the tax officers will start to check up sale’s slips. That trader that does not issue sale’s slip to the customers could be sentenced to prison for two months. The tax officers will be entitled to close commercial sites, to impose levies on the spot and to impose imprisonment punishment for at least two months to traders with incorrect book-keeping.
The failure of chasing the tax debtors is only one of the risks that are threatening the Stability Programme and that the Greek government has coordinated with the International Monetary Fund, the European Commission and the European Central Bank. The other risks are connected with the recession that could turn out to be more serious than is expected, with possible deflation that could have negative impact on the state debt, with the spread index that could keep its high values for a long time, the possible social riots against the financially restrictive measures, new unpleasant surprises from the National Statistical Service of Greece, possible problems in the national bank system that should not be excluded and the probability that the Greek crises could spread to other countries from the Euro zone.
Today the index of the Athens Stock Exchange as well as the bank index was moving down while CDS insurances of the Greek state obligations moved up to 725.4 points after the 668.6 points during the last week.