April 02, 2015


April 9 looks like a very soft deadline

This is our last briefing before the Easter Break. We expect to be back on Tuesday - earlier if there are any dramatic developments in the discussions on the Greek bailout. Except for Greece, the eurozone news is relatively dim, which is normal in the run up to Easter. Hence, the briefing is a bit shorter than usual. 

We will try to refrain from reporting on the various April fools stories from yesterday, including this hilarious one from Greek Reporter, which briefly caused some excitement. Among all the true and false news flashes yesterday what caught our attention was a comment by Greek Interior Minister Nikos Voutsis telling Spiegel that if foreign creditors do provide further funds by April 9, the government would first pay salaries and pensions and then come to an agreement with lenders on paying the IMF later. Though this was denied by government spokesman Gabriel Sakellaridis on Reuters, the story might have a true core in the sense that the government considers such a scenario among others. After all, the IMF is not too harsh in the first three months after a missed payment, as Alessandro Leipold pointed out @ALeipold

There was another version of the reform list circulating yesterday, which the Euro Working Group discussed in a teleconference, which took two hours, and predictably reached no conclusion. Given some comments by EU officials as recorded by the WSJ, Bloomberg and Kathimerini, it now seems unlikely that the eurogroup will come together next week. There won't be any developments in the coming days, one official told AFP. The fact finding exercise in Athens continues with no eurogroup meeting in sight. The next scheduled eurogroup meeting is in Riga on April 24. By that time though the Greek government might already have run out of money, comments Spiegel Online.

Peter Spiegel was the first to get hold of this new reform list, which is not so new after all. It is certainly no Plan B to secure a deal, as speculations suggested over the last couple of days. The 26-pages-long reform list contains all the revenue measures we reported two days ago, plus some more details and extensions on the reform side. The Greek finance ministry halved its growth forecast to 1.4% this year. Without the measures in the document it estimates the primary surplus to reach 1.2% of GDP. It believes its measures as outlined in the list will bring in revenues of €4.7bn to €6.1bn, implying a primary surplus of 3.1% to 3.9% of GDP, which is more than the 3% target in the bailout programme. The minimum scenario assumes net revenues of €4.68bn (2.6% of GDP), net fiscal expenditure of €1.15bn (0.6% of GDP) and privatization proceeds of €1.5bn for 2015, according to Macropolis. First comments suggest that lenders find these income estimates as far too optimistic. 

As for the measures themselves, it is worth consulting the full list as every commentator has their own take on it. Apart from the revenue raising measures we listed on Monday, there are institutional reforms in the public sector, for budget management, as well as reforms of the business and banking sector. There is a whole section on labour market reforms, but not the liberalisation measures the lenders had hoped for. Instead the section lists collective bargaining and the gradual rise of the minimum wage alongside some efficiency measures to include undeclared work into the labour market, to settle judicial conflicts between employees and employers, and simplifying labour legislation. There are also 15 social security reforms but no pension cuts. Instead it suggests suspending the "zero deficit clause" and the "automatic pension adjustment", a 13th pension for poor pensioners, and only gives a vague promise to end early retirement schemes. The list ends with measures to tackle the humanitarian crisis. 

Apart from being frustrated about the slow progress, the German press also frets about Greece possibly using its veto right to block the renewal of sanctions towards Russia in June to get concessions from its lenders. Ahead of his meeting with Putin next week, Alexis Tsipras told Tass that EU sanctions are useless and could be vetoed by Greece. 

The ECB, meanwhile, increased the ELA ceiling for Greek banks by €700m to €71.8bn, according to Bloomberg. The net deposit outflow slowed down and reached €3bn in March, bringing the total to €28bn since last October.

In his El País chronicle, Claudi Pérez calls the Greek letter a sort of affront to the Eurogroup, given the rollback of some of the supply-side reforms introduced by previous governments, and "full of depth charges" referring to pointed criticisms of Eurozone policy and its impact on the Greek economy. Pérez writes that Greece admits to financing needs of a size that would make a third program a necessity.

Our other stories

Our other stories today cover a ban on fracking; exposure limits for banks; what is jeopardising talks on TTIP; and on Bismarck and the euro.

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