The Greek government has the urgent task to legislate and start implementing the prior actions required by the bailout program in order to be ready for the first review on November 15.
Two packages of unpopular measures need to be implemented, including pension cuts and higher taxes and contributions. The successful completion of the review will unlock funds for the recapitalization of Greek banks, funds from the National Strategic Reference Framework, and the next tranche of financial aid.
The SYRIZA-ANEL government is trying to find equivalent revenues on two “thorny” measures that have caused an uproar in Greek society, namely the 23 percent value added tax on private education and higher taxation on farmers.
The Greek government is preparing an omnibus bill that will include the first package of prerequisite measures and reforms. The General Secretary of Government Michael Kalogerou will review the bill and give it its final form.
Given that there pressure for time, the omnibus bill will be tabled in parliament as an urgent procedure, something that will cause reactions from the opposition.
A positive review by Greece’s quartet of international creditors will give the green light for bank recapitalization. However, there is the hurdle of “red” loans as any plan completed has yet to tackle the problem. Also, it is not certain if Greek banks will manage to pass the October stress tests.
In addition, a successful review will bring the disbursement of a financial aid tranche, that can be as high as 5 billion euros.
Finally, a positive review will also open the path for new negotiations on state debt restructuring in December.
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