Greek Finance Minister Euclid Tsakalotos on Saturday evening announced that a staff level agreement had been achieved with creditors’ representatives in Athens, a development that is expected to lead to a rapid conclusion of the third review of the Greek program.
He said details will be unveiled on Monday at a regularly scheduled Eurogroup meeting, although he added that his leftist-rightist coalition government has assumed an obligation to implement all remaining “prior actions” listed in the third memorandum before another Eurogroup meeting on Jan. 22, 2018.
The latter date is now the conclusive, albeit unofficial, deadline for wrapping up the third review, with a fourth review scheduled in June before the third bailout officially ends in August 2018 – leaving Greece without a dedicated credit line extended by institutional creditors for the first time since mid 2010.
Among the highlights of the agreement, in principle, and according to Tsakalotos, is another change in Greece’s formerly archaic bankruptcy law, essentially changing creditors’ line of priority in case of a company’s bankruptcy, insolvency or liquidation.
One foreseen revision, among others, would put arrears owed to employees at the top of the priority line, but not the entire amount owed for overdue wages and remuneration, but using a formula based on multiplying the lowest monthly wage now mandated in the country (586 euros) by a coefficient of 2.75 over a period of six months.
Tsakalotos appeared non-committal over the possibility of deflecting or postponing an increase in VAT rates for several eastern Aegean islands, as a full harmonization of VAT rates around the country – including the most predominant highest rate, now at a “Scandinavian level” of 24 percent – is set for Jan. 1, 2018.
The news out of Athens was greeted with satisfaction by EU and Eurozone leaders, with EU Commissioner Pierre Moscovici noting that “… (the) Staff level agreement reached after a very constructive set of discussions in Athens. I will debrief the #Eurogroup on Monday on this excellent news, which sends a strong signal of confidence to investors in #Greece and bodes well for the concluding phase of the programme.”
A similar position was echoed by Commission spokesman Margaritis Schinas, who said that “…The European institutions have reached a staff level agreement with the Greek authorities on the policy package supporting the European Stability Mechanism programme. This will be presented to the Eurogroup next Monday 4 December 2017. The Greek authorities plan to implement the prior actions necessary to conclude the 3rd review as soon as possible”.
