EU official to Athens: Forget Brexit, quickly implement Greek program

Monday, 27 June 2016 15:57
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By V. Kostoulas

“Brexit” isn’t expected to particularly affect Greece, as far as economic terms are concerned, a European official told Greek reporters on Monday.

Nevertheless, the emphasis now is on an accelerated and front-loaded implementation of the Greek program (third bailout), the same official said, given that Europe now has less time and attention for Greece-related developments.

Ahead of a crucial round of negotiations leading up to the second review of the Greek program in the autumn, which is expected to be dominated by labor market reforms and actions, the same official said institutional creditors are open to proposals by the leftist Greek government.

“But this does not mean that we will return to the (economic) model (in effect) before the crisis,” a reference to high growth rates but with commensurate high rates of unemployment over the previous decades.

Moreover, despite repeated statements by the Greek government and increased media speculation over labor market reforms, the same official said flexibility and liberalization of the sector is not the biggest priority on the part of lenders. He said a liberalization of Greek consumer markets, an improved investment environment and a faster court and litigation system – amongst the “creakiest” in the EU – are bigger priorities.

Additionally, he dismissed speculation claiming creditors will press for an elimination of the so-called “13th” and “14th” salaries in the private sector, reminding that the problem in Greece is not the level of remuneration but non-wage costs burdening employers.

In terms of the thorny issue of Greek debt relief, the official said the IMF’s continued participation in the Greek program was unclear, as the latter is insisting on the immediate quantification of measures for such relief, even if applied after 2018, when the program is due to conclude.

Queried by “N” over the latest “tax tsunami” foreseen in last month’s ratified austerity package, the European official acknowledged that creditors are concerned over the effects of increased taxes – both direct and indirect – on Greece’s fragile “real economy”, yet the latter were obliged to respect the current government’s “preference for (income) redistribution policies”.

Finally, he said that despite increased taxes, the latest package also includes actions to improve tax and revenue collection, something that the Athens government must emphasize.

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