Greek Government Rushing to Complete Prior Actions

Greek GovernmentIt has been 12 days since the Greek parliament ratified a list of prior actions that would pave the way for the disbursement of two billion euros of the bailout funds to Greece.

A few days later representatives of the country’s international creditors — the European Commission, the European Central Bank, the European Stability Mechanism and the International Monetary Fund — visited Athens to review these prior actions and decided that additional prior actions are needed. A stalemate between the Greek government and the creditors has since occurred. This could further delay the disbursement and the developments that were slated to follow it.

A Euro Working Group is set to convene on Thursday, to discuss developments in Greece and the disbursement of this bailout installment. In this race against time, the Greek media reports that the Greek government is rushing to submit two proposed pieces of legislation to the Greek parliament by Thursday. One includes additional prior actions, while the other is a bill on the recapitalization of the Greek banks.

Kathimerini newspaper cites European officials who are concerned about how Greece will be able to complete both the first and the second set of prior actions, as well as the conclusion bailout review by November 15, the date which was agreed upon in August. The delayed disbursement and the delayed completion of the review will push back the discussion on debt relief for Greece as well as the recapitalization of the Greek banks, which is scheduled to take place after the completion of the review.

On the other hand, European Commission spokesperson Annika Breidthardt noted negotiations are improving and that technical negotiations should be concluded soon, with the ultimate decision resting with the Eurozone countries.

Outstanding Issues

The Greek government announced on Tuesday that 90% of the bailout prescriptions required by mid-October have been completed. The government also claimed it will submit to the Greek parliament a proposed bill on the recapitalization of Greek banks.

The three main issues separating the two sides are foreclosures on first homes, VAT on private education and licenses for pharmacists in Greece.

The two sides have a different opinion on the ceiling of home values, below which homes should not be foreclosed. The Greek government had proposed a 350,000 euro limit while creditor representatives are asking for a 120,000 euro limit.

The creditors also disagree with the Greek government’s proposed three-tier VAT system on private education. European Commissioner for Economic Affairs Pierre Moscovici argued on Tuesday that a three-tier system does abide to European law. Greece must either tax private educational institutions with the country’s central VAT rate, which is 23%, or implement equivalent fiscal measures in other areas

Licenses on pharmacists have been the latest thorn in the effort for an agreement. On Monday, pharmacists in Greece carried out a nationwide strike in response to the government’s plan to issue licenses to non-pharmacists. The new plan would issue licenses to individuals pharmacists to open pharmacies, under the conditions that they own the majority stake while an existing pharmacist also has a stake in the business and one individual cannot own more than five pharmacies. The reaction of the pharmacists has caused the Greek government to seek the implementation of a different plan and hence, the disparity with the creditors.