Representatives of institutional creditors return to Athens on Wednesday for what’s expected to be the final stretch of negotiations leading to the first review of the current Greek bailout program, the third consecutive memorandum, in other words.
Wednesday’s meeting between Greek FinMin Euclid Tsakalotos and the creditors is expected to focus on the time-frame of negotiations and deadlines, although at press time at least nine issues, in broad terms, were cited as dominating talks.
Specifically, they are:
A) The ENFIA property tax. Creditors, now known as the “quartet”, want a more flexible regime to allow for the adjustment of tax variables, in order to ensure that the goal of 2.65 billion euros in annual revenue is met.
B) Income tax. The leftist Greek government had earlier informed creditors’ technocrats that it wanted to again raise income tax on the over 30,000-euro bracket. However, creditors pointed out that 95 percent of the tax base in terms of income tax returns is under 30K.
C) Merger of various pension funds. The “quartet” proposes that only three remain: one for wage-earners, one for self-employed professionals and one for farmers. The Greek side reportedly wants a long grace period in which to implement the measures.
D) Recalculating pensions. This is one of the most crucial areas of negotiations, with creditors pressing for a recalculation based on the actual number of years of contributions paid by beneficiaries, in order to determine their monthly social security payment.
E) Non-performing loans. Four issues prop up here, namely, procedures for out-of-court arbitration, the establishment of a coordinating mechanism, a description of the procedures followed by the courts and finally, the sale of NPLs to third parties, such as hedge funds or “vulture funds” operating outside of the framework of Greece’s four systemic banks. This is the main obstacle in this chapter, as the Tsipras government wants to exclude primary homes with outstanding mortgages from the cache of transferred NPLs, consumer loans of up to 20,000 euros, commercial loans to so-called SMEs of up to … 500,000 euros, loans by self-employed professionals (doctors, lawyers, engineers etc.) of up to 100,000 euros, outstanding loans that have taken advantage of a 2010 law on NPLs and loans allocated with the Greek state as the guarantor. Creditors will reportedly point out that there isn’t much left after these exclusions.
F) So-called “closed professions”. The “quartet” wants the profession of engineer and bailiff, amongst others, “opened”.
G) Fines for employers with uninsured employees. One idea, again on the creditors’ side, is to reduce the current – and huge – fine of 10.550 euros to 3,500 euros. However, any uninsured worker located at a business will be hired for at least nine months.
H) Calculating social security contributions by self-employed professionals. This is one of the more complicated issues, although the general direction that creditors want is to calculate the exact income of a professional in order to base his monthly contribution to the relevant pension / health fund.
I) Healthcare spending, non-prescription medicines: Creditors want a list of the non-prescription medicines that will be allowed to go on sale at super markets and other retail points, as the current regime allows their sale only at pharmacies – items that currently include cough medicine and anti-lice shampoo, for instance. A ceiling on the number of doctor visits and diagnostic tests, per month, is also being studied.
