Greek Plan to Tackle Economy Goes Before Finance Chiefs
A man holds a Greek flag in front of the Greek parliament in Athens as people gather in support to their government on Feb. 20.
Photographer: Louisa Gouliamaki/AFP via Getty Images
(Bloomberg) -- Greece’s month-old government is about to find out whether a package of new economic measures sketched in recent days is enough to win more funding from the rest of the euro region to keep the country solvent.
A draft list was sent to creditor institutions on Monday, based on a provisional agreement on Feb. 20. A Greek government official said the policies will be provided to the euro-area group of finance ministers on Tuesday before they discuss on a conference call whether the commitments go far enough.
“I am very confident,” Dutch Finance Minister Jeroen Dijsselbloem, who is president of the group, said in an interview at an event in Tilburg, the Netherlands, on Monday. “The Greek government has been very serious, working very hard the last couple of days. We need it to be strong enough to work on the next couple of months. I am always optimistic.”
Approval of the Greek plans would offer a four-month reprieve for the country. At the same time, Prime Minister Alexis Tsipras must try to avoid defections within his anti-austerity Syriza party after it won power on pledges to take back control of Greece’s finances.
The measures are first subject to validation by the International Monetary Fund, the European Central Bank and the European Commission, the institutions that were known as the troika and from which Tsipras told voters Greece would break free. A draft was under discussion Monday evening, an official from the institutions said. The person asked not to be named because the deliberations are private.
Hopeful IMF
IMF Managing Director Christine Lagarde said she hoped there would be a “meeting of the minds” between Greece and the rest of Europe on the changes needed.
“Greece has to go through very in-depth, sometimes difficult reforms,” she said in an interview on HuffPost Live on Monday. They “will have to tackle vested interests, protected professions, rigidity in various markets,” she said.
The government said in a statement the same day that the list will include all of Syriza’s pledges for “alleviating the humanitarian crisis” and the cabinet will convene on Tuesday after the document goes to finance ministers.
The package would then be put to national parliaments for formal consent, though lawmakers and officials in Germany, Finland and the Netherlands signaled they won’t stand in the way once their governments grant consent for the aid extension.
‘Red Lines’
Greek government spokesman Gabriel Sakellaridis said earlier that the list will include fighting corruption and changes to the tax system.
There are still plans to increase the minimum wage, introduce legislation on bad loans and back taxes and maintain pensions, he said. It will also restore collective bargaining for labor unions. They are “red lines,” said Sakellaridis.
Tsipras, 40, has said the agreement “cancels austerity” and annuls pledges by the previous government to cut wages, pensions and state employees and increase sales taxes.
The agreement permits Greece to lower previously agreed upon targets on a primary budget surplus, the money it has left over before interest payments on debt. That gives Tsipras room to at least come good on some pre-election pledges.
In return, though, the Greek government will refrain from unilateral action that may risk those goals and will abandon plans to use about 11 billion euros in left-over European bank support funds to help restart the economy.
Tough Sell
Since its first international bailout in 2010, Greece’s economy has shrunk by about a quarter and it’s shouldering the highest unemployment in the euro region.
The Greek Parliament will approve the list of measures even if Syriza doesn’t fully meet pre-election promises, George Stathakis, minister for economy, shipping, tourism and infrastructure, said in an interview with Sunday’s Kathimerini.
Environment and Energy Minister Panagiotis Lafazanis, though, told Real News in an interview that Syriza’s “red lines won’t be violated, that’s why they’re called red.”
Tsipras “will certainly have a difficult time to explain the deal to voters,” Ariel Rajnerman, an analyst at Roubini Global Economics, wrote in a note to clients dated Feb. 23. “The Greek drama shall continue but eventually a compromise will be found as there’s no intention on the part of anyone to spoil the cyclical momentum Europe can finally enjoy.”
To contact the reporters on this story: Nikos Chrysoloras in Athens at nchrysoloras@bloomberg.net; Fred Pals in Amsterdam at fpals@bloomberg.net; Rebecca Christie in Brussels at rchristie4@bloomberg.net
To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Rodney Jefferson
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