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Euro zone lenders, Greece make progress on tax, pension reforms
March 20, 2016 / 3:51 PM / 2 years ago

Euro zone lenders, Greece make progress on tax, pension reforms

BRUSSELS (Reuters) - European lenders have made important progress with Greece on tax and pension reforms in a package of measures Athens must adopt to win new loans and debt relief, a European Commission spokesperson has said.

Greece's Prime Minister Alexis Tsipras (C) and Greek Finance Minister Euclid Tsakalotos (L) leave a euro zone leaders summit in Brussels, Belgium, July 13, 2015. Euro zone leaders clinched a deal with Greece on Monday to negotiate a third bailout to keep the near-bankrupt country in the euro zone after a whole night of haggling at an emergency summit. REUTERS/Eric Vidal

Inspectors from the European Commision, the European Central Bank and the International Monetary Fund assessing Greece’s progress on reforms left Athens on Sunday, taking a break for the Easter holiday in western Christianity.

“The mission has been productive. Significant progress has been made on the income tax reform,” the spokesperson said late on Sunday.

“The mission made important progress on key aspects of the pension reform. Work is ongoing and will continue over the Easter break. The mission chiefs will return to Athens on April 2 to resume the discussions with a view to conclude them as soon as possible,” the spokesperson said.

Greek Prime Minister Alexis Tsipras wants to wrap up the reform review quickly to clear the way for talks on debt relief, help restore confidence in the country’s economy and persuade the Greek people that their sacrifices over six years of austerity are paying off.

European Commission Vice President Valdis Dombrovskis told a group of regional German newspapers that the talks with Athens were constructive but added: “There’s still a huge amount to do”.

He said Greece currently had sufficient cash reserves but it was important now to complete the review so the next tranche of funds could be paid out. Lenders and the Greek government agree that the review needs to be finished quickly to “send a reassuring signal that Greece is financially stable”, he said.

But the talks have dragged on for months due to disagreements over fiscal targets, pension cuts and tax reforms between Athens and its European Union and IMF lenders, and among the EU and IMF institutions themselves.

The focus is on ways to cover an estimated fiscal gap of 3 percent of GDP by 2018.

According to sources close to the talks, EU lenders have been more lenient during the review than the IMF, which has said Greece will need far bigger debt relief than euro zone partners have been prepared to envisage.

A meeting of euro zone finance ministers in April will be crucial for Greece, which is also dealing with a huge migrant crisis.

The government, which has a parliamentary majority of just three seats, has pledged to trim its pension budget by 1 percent of GDP this year. But it wants to avoid cutting pensions for the 12th time since 2010 to plug the estimated fiscal hole.

Greek government officials said the IMF opposed key pension proposals, such as hiking social security contributions, during the latest round of talks and it wants to lower a tax-exempt threshold for low-income earners.

It has also turned down a plan giving tax evaders incentives to disclose hidden income as part of efforts to boost tax revenues.

Reporting by Jan Strupczewski; Additional reporting by Michelle Martin in Berlin; Editing by Tom Heneghan

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