Tuesday, February 24, 2015

Greece readies list of reforms to dodge bankruptcy

By Mehreen Khan 23 February 2015

Athens will now submit a list of economic reforms to its creditors on Tuesday in return for a bail-out extension

Finding a fix: Greece's creditors will decide whether to extend its bail-out for four months this week Photo: Reuters

The Greek government will submit plans to root out tax evasion and tackle corruption in the country, in a bid to be granted a vital extension of its bail-out programme tomorrow.

Athens was due to present a series of proposals to its international lenders in return for a four-month bail-out reprieve by midnight tonight.

But a Greek government spokesman has now said the letter will be sent to creditors on Tuesday morning, when Eurozone finance ministers are due to discuss the measures in a telephone conference.

The European Central Bank, International Monetary Fund and the European Commission will need to rubber-stamp the proposals to ensure Greece receives the €7.2bn in financial aid that would allow the embattled country to complete the rest of its bail-out programme.

Euro group president Jeroen Dijsselbloem said he was "optimistic" the plans would be strong enough to ensure a bail-out extension before the February 28 expiry date.

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Graffiti outside the European Central Bank in Frankfurt

Rumours about the content of the proposals began to circulate on Monday.

It could include measures to implement a collective wage bargaining system to raise the country's minimum wage, and the privatisation of state assets - a policy that has been fiercely opposed by the left-wing within Syriza's ranks.

The European Commission denied they had received the letter by mid-afternoon, saying they were continuing their talks with Greek authorities.

The reasons for Athens delay are not yet clear. Greek markets were closed on Monday to mark Lent.

 A Evans-Pritchard ✔ @AmbroseEP


Am reliably informed that Greek reform list is 5 pages, including labour reform with ILO, and minimum wage (which will irk Berlin)

11:15 PM - 23 Feb 2015

 A Evans-Pritchard ✔ @AmbroseEP


Greek reform plan will include firm-level "smart" collective bargaining. Syriza's Left Platform not happy, but won't kibosh (apparently)

11:25 PM - 23 Feb 2015

However even if approved, the first tranches of the bail-out are not expected to be released before April, squeezing the Greece's public finances and likely putting on hold Syriza's pre-election promises to reforms its pensions and re-hire government workers.

The extension, which was agreed in principle at deadline day talks on Friday evening, will also need to be ratified by the parliaments of the 18 other member states of the Eurozone, including the German Bundestag, if Greece is to remain solvent.

A failure to extend the programme could see the country run out of money before the end of next month, as it faces repayments of over €1.5bn to the IMF in March.

Data from January showed tax revenues had collapsed, while Greek banks suffered deposit flight of more than €1bn a day at the end of last week.

Yanis Varoufakis, the country's finance minister, said a failure to rubber stamp the proposals would mean the agreement would be "dead and buried."

In a tweet on Sunday night, Mr Varoufakis said the reform list was "ready" but had not yet been sent for review.

 Yannis Koutsomitis @YanniKouts                                                     22 Feb

Greek gov't sends draft reform list to the 'institutions' http://www.tagesschau.de/wirtschaft/griechenland-345.html … /via @tagesschau #Greece #Euro group

 Yanis Varoufakis @yanisvaroufakis


@YanniKouts @tagesschau Our reform list is almost ready. But rumours that we have dispatched it already to the Commission are false.

8:38 AM - 23 Feb 2015

Eurozone finance ministers could convene an emergency meeting on Tuesday if the institutions reject the reforms.

The Syriza-led government also faces a domestic battle to convince voters they have not gone back on their pre-election pledges to reflate the economy.

"The road ahead remains long, and it remains unclear how the current government can navigate between the commitments it has made to Europe with competing domestic political demands," said George Saravelos at Deutsche Bank.

In a defiant address on Greek television over the weekend, Prime Minister Alexis Tsipras said his country would no longer be "asphyxiated" by austerity.

"Yesterday's agreement with the Euro group cancels the commitments of the previous government for cuts to wages and pensions, for firings in the public sector, for VAT rises on food, medicine," the prime minister said on Saturday.

"We averted plans by blind conservative powers, within and outside the country, to asphyxiate Greece on February 28," he said.

But dissent within Syriza's party ranks began to emerge over the weekend.

Veteran Leftist politician and hero of the Greek resistance in the Second World War, Manolis Glezos said the government was "renaming fish as meat” in failing to throw out the existing bail-out deal.

"I apologise to the Greek people for participating in this illusion," the 92-year-old Mr Glezos wrote on his blog.

However, Mr Tsipras still commands a 70pc-80pc approval rate among the Greek public, according to the latest polls.

A bail-out extension will still not secure Greece's future in the monetary union.

Athens will likely require a third bail-out programme in June as it faces more than €6.7bn of bond redemptions to the ECB in July and August.


Progress on reaching a temporary reprieve could see the ECB resume its ordinary lending to Greek banks and alleviate the pressure on the country's lenders.

The ECB banned the acceptance of Greek bonds as collateral for loans earlier this month, forcing banks to rely on more expensive emergency liquidity help which has been stretched to its limits over the past week.

At the current rate of deposit flight, Greek banks will have run out of money in less two months, according to JP Morgan.

The prospect of a bank run means the option of capital controls cannot be ruled out in Greece, according to Deutsche Bank.


Greece readies list of reforms to dodge bankruptcy - Telegraph