The Eurozone working group of finance chiefs has ok’d release of a delayed one billion euro ($1.37 billion) installment from international lenders after a deal was reportedly reached on a modified plan to pare down the money-bleeding Hellenic Defense Systems and as the government said it would go ahead with lifting a ban on foreclosures with protection for the most vulnerable.
The government said it would also extend a cut in the Value Added Tax (VAT) on restaurants from 23 to 13 percent without permission of the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB.) The reduction was put in place during the summer to help tourism but the lenders want it put back.-
Greece won some of what it wanted on EAS, which the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) wanted sold off or shut down as it loses money and critics said has been used as a dumping ground for political patronage hires for decades from Prime Minister Antonis Samaras’ New Democracy Conservatives and his coalition partner, the PASOK Socialists.
The proposal for EAS foresees the retention of three factories to produce military equipment, with the remaining two closing in June and September next year. There will be a resolution of the section of the company responsible for civilian projects and it will also be stuck with the illegal state aid that EAS had received so far.
Some 500 workers will remain at the company, with more than 300 being bought out at a cost of six million euros, about $8.26 million. The original plan had foreseen less than 350 workers remaining at the company.
The Greek government said it’s committed to EAS generating revenues of 13.5 million euros ($18.59 million) from exports next year, rising to 20 million the year after. If the company is not making a profit by the end of next year, it will be downsized further.
Agreeing the future of EAS was the last “prior action” remaining for the Eurogroup to approve the release of the delayed July installment for one billion euros. Athens hopes that the European Stability Mechanism will release the money on Dec. 19.
No word on how the other disagreements will be settled though as Greece, taking a stronger stance as it looks as if a primary surplus will be reached, is set to continue the VAT reduction without the Troika’s blessing and to lift the mortgage ban with protections in place for the most vulnerable, said to be 85 percent of those in default.
It was reported that homes with a taxable value of under 180,000 euros (as opposed to the current 200,000) won’t be repossessed if the owners have an annual household income of less than 25,000 euros. Otherwise, banks will take their homes.