As Greek Prime Minister Antonis Samaras tries to convince his reluctant coalition partners to go along with changes to labor rights – including the reported firing of 65,000 workers over the next three years – Germany has again raised the idea of forcing Greece to give up control of its state budget to an outside overseer.
The newspaper Kathimerini reported it had seen a document from the German Finance Ministry that sets out a requirement that revenues from the bailout loans from Greece’s international lenders be put into a special escrow account to insure that banks and investors are paid back before any money goes into social services or government operations.
The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) is putting up $325 billion in two rescue loan packages to prop up Greece’s teetering economy, which is drowning in $380 billion of debt. Beside the loan proceeds, Germany also wants any monies from tax revenues and any surplus that could result to first be paid into the trust account to pay down debt and protect investors and banks first.
“A dedicated receipt (such as part of Value Added Tax income) in the volume of the requested GRC primary budget surplus could be transferred monthly to the trust account (as earmarking of GRC contribution to debt service),” the proposal says. The document adds that should Greece not achieve a primary surplus, as agreed with the Troika, it would have to decrease spending or increase revenue accordingly. The German plan also calls for automatic cuts should targets not be met.
The German Finance Ministry – through its minister, Wolfgang Schaeuble, has been arguing for tougher control of Greece’s budget, fearing the monies could be misspent as they have for generations. The report also called for more external assistance to be provided to Greece to conduct structural reforms by enhancing the role of the EU Task Force. “More intense, compulsory employment of external technical assistance for, among others, administrative capacity building, including for tax collection, corruption reduction, statistics, growth-enhancing investment strategies, use of structural funds, privatization process would further support the implementation of the program,” the report added.
It also suggests that technical assistance should be provided by the World Bank and the Paris-based Organisation for Economic Co-Operation and Development (OECD.) The document concludes with proposals for growth-enhancing measures.