Greece Reaches Agreement With Creditors to Close Bailout Program Evaluation

Wednesday, March 29th, 2017
Last Update: 14:18

An agreement with between Greece and international creditors has finally been reached on the issues of labor reforms, spending cuts and energy issues, moving closer to a staff level agreement before a meeting of euro zone finance ministers on April 7, Reuters says.

Citing two officials close to the talks, the Reuters report says that Athens agreed to cut pension spending by up to one percent of GDP in 2019. The Greek side also agreed to lower the tax-free threshold to about 6,000 euros, a measure that would save roughly another 1 percent of GDP, an EU official said.

On labor reforms, Greece will not increase the percentage of mass layoffs further, as initially demanded by the International Monetary Fund, the two officials said. Collective bargaining is expected to be revived after the country’s current bailout program expires in 2018.

Statements made by Finance Minister Euclid Tsakalotos in Greek Parliament on Tuesday had indicated that the government made concessions in order to close the bailout program review.

Tsakalotos spoke during a Parliamentary Budget Office meeting saying that “the evaluation will close sooner than you think.”  He added that after the bailout program review is completed, the discussion between Greece and lenders on medium-term debt relief measures will commence.

“The International Monetary Fund has made it clear that it will not participate in the program without guarantees for debt relief measures. This will be an important signal for the markets, as it will give the green light for medium term debt relief measures and for (Greece to enter) the quantitative easing program of the European Central Bank, which means a lot for the liquidity (in Greek banks),” the finance minister said.

Furthermore, Tsakalotos said that the measures that the Greek negotiating team has agreed on will have zero fiscal impact because there will be counter measures to balance them. However, he did not specify what the counter measures will be.

Regarding privatizations, Tsakalotos said that the sale of public assets will go as planned and that the new privatization “super fund” will be a vehicle that will increase public wealth.

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