Eurogroup postpones 15-bln€ tranche to Greece due to Berlin's objections to island VAT decision

Thursday, 12 July 2018 21:51

A scheduled disbursement of 15 billion euros to Greece, the final tranche of the current bailout, has been kicked back to early August, after Berlin reportedly objected to a high-profile decision by the coalition government late last month to “freeze” a scheduled harmonization of the VAT rate on five eastern Aegean islands.

This week witnessed conflicting press reports over whether the German government was briefed prior to the decision, and whether once briefed, it acquiesced to the initiative.

Following Thursday’s Eurogroup, its chairman, Mario Centeno said approval of the loan tranche will come after “national procedures” are concluded in Germany – something he assessed will happen early next month.

Conversely, EU Commissioner Pierre Moscovici, one of Greece’s more prominent “boosters” among European leaders, expressed certainty that no delays will plague the last tranche of the current bailout, merely saying a “little more time” will be necessary.

Greek Prime Minister Alexis Tsipras himself announced that his poll-trailing government would not raise VAT rates on the five islands, which have borne the brunt of the refugee/migrant crisis since it dramatically affected Greece in 2015. Tsipras' announcement, in fact, was broadcast live by the state broadcaster, and officially involves a postponement of the measure until Jan. 1, 2019.
Berlin, according to reports, wants counter-veiling measures to offset the postponement of the decision to harmonize (with the rest of Greece) the VAT rates on Lesvos, Hios, Samos, Kos and Leros.

On his part, ESM Managing Director Klaus Regling said the specific “sum”, the difference between applying the measure now rather than in six months, is only 28 million euros, something he said Athens has promised to find elsewhere. 

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