Talks on the bailout program review between Greece and creditors resume today (Monday) with the two sides aiming at a draft deal by Holy Thursday.
If Athens and the mission chiefs of the European Commission, European Central Bank, European Stability Mechanism and the International Monetary Fund reach a staff level agreement by then, it will be ratified in an extraordinary meeting of euro zone finance ministers on (Greek Orthodox) Holy Thursday.
Negotiations now are on two packages of measures, the first package worth 5.4 billion euros and a contingency package worth 3.6 billion euros that will be activated if the first package fails to meet the target of a 3.5 percent of GDP primary surplus set for 2018. Athens has to legislate both packages.
On the first package of measures, there is a difference of 70 million euros that the Greek government will have to draw from further supplementary pension cuts.
On income tax, there are still differences of the threshold for tax exempt incomes. Greece insists on a 9,100 euro threshold while creditors demand a lower threshold of 8,182 euros.
On bad loans, the Greek government wants to protect from auction mortgages of primary residences below 140,000 euros until 2017. Creditors want to include income criteria.
On the package of contingency measures that includes suggested pension and wage cuts, the Greek side seems to resist, with Finance Minister Euclid Tsakalotos claiming that Greek legislation does not allow for measures and reforms to be legislated in advance. Sources from the finance ministry say that Athens will counter-propose measures such as spending cuts.
Another thorny issue is what mechanism would determine whether the contingency measures would have to be implemented or not. Athens considers a committee consisting of Eurostat and Greek Statistical Authority (ELSTAT) members that would monitor the progress of the Greek economy, so the activation of the contingency measures is based on actual financial data.
Creditors, on the other hand, propose that the evaluation of the Greek economy is done the way the evaluation of the progress of the bailout program is done now. In other words, the four lending institutions will be reviewing the implementation of the bailout program and they will be the ones to decide whether contingency measures are needed.
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