The Eurozone Finance Ministers 24 may have to make a decision on the transfer of the tranche of Greece’s €5.4 billion (3% of Greek GDP) to combat the debt crisis in which the country was in 2010. At a specially convened meeting to be held in Brussels, they will assess the economic situation in Greece and Athens carried out the anti-crisis program (see reference).
At the beginning of 2016 the public debt of Greece amounted to € € 321.3 PSM billion, or almost 180% of GDP, more than half of the debt was loans from European countries. As reported by the Greek newspaper “Kathimerini”, according to analysts ‘ estimates, Greece needs to repay with the beginning of the year to the end of July more than €5 billion, the principal amount of payments was €3.7 billion — is in July. In particular, the international monetary Fund (IMF) and European Central Bank (ECB) in July, expect about €2.8 billion.
In may, Prime Minister Alexis Tsipras has warned European lenders that without the new tranche the country will not be able to service debts in the coming months. May 12 Athens paid €750 million in debt to the IMF — due to its reserve position in the Fund. According to Tsipras, the money in the state budget no.
The government of Tsipras came to power in early 2015 on promises to abandon the signing of memoranda with creditors, under which the country received loans in exchange for tough measures to improve the economy. But last summer, the crisis reached its peak — Greece announced a default and began to consider leaving the Euro — and the Prime Minister was forced to continue the policies of his predecessors.
In June 2015 the Parliament has agreed in exchange for financial assistance from international lenders in the amount of €86 billion to spend, the third consecutive series of austerity measures, in particular, to raise the retirement age, privatize state companies, reduce costs, introduce additional taxes and increase existing ones.
Under these conditions, the Parliament of 22 may 2016, the adopted package of measures, which provide for the creation of a Fund to manage the funds received from privatization of state property, and tax increases. In particular, there will be increased indirect taxes, collected by the government until 2018 expects to receive an additional €1.8 billion: tax on motor vehicles, as well as retroactively (from January 2016) — taxes on gambling and property taxes for mutual funds and companies on management of securities, if their income exceeds €33 million a year. From June 1 will increase the maximum VAT rate from 23% to 24%, while Greek Islands will lose preferential rates of VAT. From 2017 will be increased rates of cellular and fixed communications, the excise taxes on motor fuel, alcohol, tobacco and coffee. For the adoption of the proposed 153 MPs from the government bloc SYRIZA and the party “Independent Greeks”, against — 145.
Two weeks before this, Athens has taken yet another package, involving, among other things, the reduction of pension costs. Reducing pension costs is one of the conditions of granting a new tranche.
The Eurogroup expects that the measures taken should lead Greece into a budget surplus of 3.5% of GDP in 2018.
What to expect from the meeting
That the decision on granting the tranche can be positive, reported the head of the Eurogroup Jeroen Deysselblum at the end of the previous meeting on 9 may. Then, he said, were “basic discussion”.
The IMF, which is now not involved in lending to Greece, hopes that the meeting will discuss the issue of debt relief, the country and the economic adjustment program of the Greek government. As the IMF suggests, the tasks assigned to Greece by the Eurozone, led by Germany, the current conditions are difficult. The Fund fears that the debt will remain too high and the country will be forced again and again to seek outside assistance.
“The IMF’s involvement in the financing programme depends on the actual policy measures and significant debt relief,” — said the official may 20, the IMF representative Jerry rice. These include specific proposals on a debt restructuring, which acts against Germany. “From the point of view of a rational approach to the debt load of Greece looks like a smart move to offer new benefits in the form of exchange more expensive debt service to less costly debt, but in the end the decision on this issue will be taken by the Eurozone countries and Greece”, — he explained.
Until the last moment to oppose the debt cancellation was made by Germany when that economy Minister Sigmar Gabriel shares the position of the IMF in part of debt relief. “Sooner or later it will happen, it makes no sense all the time to escape from solving this issue,” he said.
As writes Bloomberg, citing a draft European Commission report about the implementation of the economic program of Greece, in addition to the tranche of €5.4 billion the creditors are prepared to pay Greece an additional €11 billion, which will be used to pay part of the debt (EUR 3.8 billion) and it services (€7.2 billion will cover the costs of loan servicing until the end of November). Money can be transferred as soon as Athens will succeed in fulfilling its anti-crisis program, which, as noted in the report, “in the broad sense paves the way for Greece receiving the next tranche”.