Greece to Legislate Fiscal Measures in Advance to Complete Bailout Program Review

Tuesday, February 21st, 2017
Last Update: 11:38

The Greek government on Monday agreed to legislate new fiscal measures that will apply from 2019 and on in order for creditors’ missions to return to Athens to resume talks on the bailout program review.

The new measures are not recessionary; instead they are geared to facilitate growth, a Greek official said after the Eurogroup, adding that the agreement was in accordance with the government line that “not one euro of austerity measures will be accepted.”

According to a Kathimerini report citing a European official, the fiscal measures on the table are equal to 2% of GDP, or approximately 3.6 billion euros, with 0.75% of that coming from security funds and 0.75% from taxes.

Eurogroup President Jeroen Dijsselbloem clarified that the Greek side agreed to some structural reforms and the development measures can only be implemented if Athens achieves the fiscal targets set, i.e. a 3.5% primary surplus each year, at least for three years after the bailout program ends in 2018.

The reforms Dijsselbloem referred to were changes in labor laws, a restructure of the pension system and tax reforms.

The Eurogroup president also stated that there is no political agreement at this point, noting that Greece still has a long way to go. He further said that if and when there is a staff level agreement after the creditors’ teams return to Athens, the Eurogroup will take the final decisions on determining primary surpluses for the medium term.

An issue that was not resolved on Monday’s meeting of euro zone finance ministers was whether the International Monetary Fund will participate financially in Greece’s bailout program. IMF representative Delia Velculescu will return to Athens next week for a new round of talks, however, the differences between the Fund and European institutions over Greece’s fiscal targets still remain. The Fund believes that Athens needs to make further progress on structural reforms and budgetary issues in order to succeed.

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