With the Greek government and international creditors having failed to reach an agreement that would unlock two billion euros of bailout funds to Greece, the progress of the Greek bailout appears to be delayed. The Greek government however argues that this is not the case.
On Tuesday, the Greek Governmental Council for Economic Policy expressed its satisfaction with the implementation of bailout’s agreements thus far. The council assessed that almost 90% of the bailout prescriptions that should have been enforced by mid-October have been implemented at this time.
Negotiations between the Greek government and international creditors on outstanding issues that amount for the remaining 10% are ongoing, the council noted. Among the differences that must be bridged is the sensitive matter of the protection of homeowners from the foreclosure of their first homes. The disagreement between the parties concerns the level of the ceiling of home values, below which homes will not be foreclosed. The disparity is over 200,000 euros, as the Greek government has proposed a lower ceiling of 350,000 euros on the values of homes, while the international creditors are asking for 120,000 euro ceiling.
The two sides must also agree on VAT rates on private education. The Greek government had proposed a three-tier taxation system that will tax depending on the type of private institution. European Commissioner Pierre Moscovici claimed, in a response to a New Democracy European MP’s inquiry, that the Greek government cannot impose a tiered taxation, system according to European Union laws. It can choose to not impose any taxation or impose the country’s central VAT rate, which in Greece amounts to 23%.
The government will also submit a proposed legislation on the anticipated recapitalization of Greek banks later in the week, the council noted. This recapitalization is contingent on the completion of the first review of the new Greek bailout, which in turn hinges on an imminent agreement between the Greek government and the international creditors, on the additional bailout measures and reforms.
The governmental council also attributes unsettled differences with creditors to disputes of political nature.
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