Greece agrees reform ‘starting point’

Greece committed itself to seven pages of reforms from streamlining tax and Vat systems to alleviating poverty through non-pecuniary measures such as food stamps.

The document, while accepted by the eurogroup as a ‘starting point’ to extend the austerity programme, was met with various degrees of scepticism by the IMF and the ECB.

What follows now is up to two months of fleshing out the commitments with detail of how they will be achieved, how much they will cost or save, and deadlines, but no timeline on paying out the remaining €7.3bn in assistance.

A host of measures the left-wing Syriza government committed itself to before the election were abandoned or left on the long finger in the document that was finally submitted around 12 midnight on Monday night.

An undertaking to restore the minimum wage from €550 a month to around €730 a month would be phased in as productivity and competitiveness allowed, according to the document.

The minimum guaranteed income scheme pilot project would be evaluated with a view to extending it nationwide, but the final sentence commits the state to “ensure that its fight against the humanitarian crisis has no negative fiscal effect”.

It pledges to “address needs arising from the recent rise in absolute poverty (inadequate access to nourishment, shelter, health services and basic energy provision) by means of highly targeted non-pecuniary measures (e.g. food stamps)”. Eurostat says that 35% are at risk of poverty.

They commit to reform the Vat policy, administration and enforcement and the tax collection system including establishing a wealth database to help gauge the veracity of previous income tax returns.

They also undertake to review and control spending in every area of government, rationalising non-salary areas that account for 56% of spending; improve the provision and quality of medical services including universal access.

Work on modernising the pension system will continue including closing loopholes that give rise to early retirements especially in the banking and public sectors.

In government itself they commit to cut the number of ministries from 16 to 10, tighten the law on political party funding, and ban loss-making media from continuing in operation.

They commit to deal with non-performing loans, and avoid auctions of the main residence of households below a certain income threshold.

On privitisations, they commit not to roll them back and review the terms of those not yet launched to improve the terms but try to focus on long leases or joint ventures.

The IMF letter, signed by Christine Lagarde, decried the lack of “clear assurances” that the government intended to undertake the reforms in the original memorandum, as these are ‘critical for Greece’s ability to meet the objectives” and so the list could not be confined to that submitted by Athens.

The letter from the ECB was in a similar vein saying that the basis for current and future arrangements will be the current memorandum.

Where commitments are to be replaced they will have to be with measures “of equal or better quality”.

President of the eurogroup, Jeroen Dijsselbloem told the European Parliament he believed Athens was very serious about the reforms, but added, “This is not going to be easy. This is just a first step”.

He said the list was not new but an indication of the kind of reforms they would like to push and replace some existing commitments.

“It is going to take time to really get into the details and to designed a new contract which will carry us on for four months”, he added.

There was some controversy over a Twitter post showing the commission’s lead negotiator with Greece, Galwayman Declan Costello, as the “author” of the Greek document.

While it was known that the ideas were batted back and over between the institutions and Athens, the commission denied it was the ultimate ‘author’.

The EPP group warned that Europe as not giving the Tsipras government “a blank cheque” and that it had four months to pursue the reform path.

Pasok, which had been in government with New Democracy, accused Syriza of taking steps back by having to commit to so much just as the country had been due to leave the programme.

However the troika had refused to sign off on the end of the programme as expected last September because the existing government had failed to fulfil the terms.

The Germany economy minister, Sigmar Gabriel said he was “cautiously optimistic that we are moving step-by-step towards a resolution”, and continue aid for Greece.