Greece has to implement 82 “difficult” prerequisites in order to successfully complete the third and fourth review of the bailout program, a Kathimerini newspaper report says.
The Supplemental Memorandum of Understanding, and the technical memorandum accompanying it, has specified in detail what the Greek government needs to do to close the current evaluation. It also states what the government needs to implement in order to complete the fourth and final evaluation, between March to June, 2018.
It is explicitly stipulated that in May 2018 Athens might have to reduce the tax-free income threshold in 2019 instead of 2020, if the International Monetary Fund, in co-operation with the European institutions and Greece, considers that the agreed target of a primary surplus of 3,5% for 2019 cannot be achieved.
In March 2018, the “favorable tax legislation for the shipping industry,” should be revised according to European Commission guidelines.
In March, real estate prices must be adjusted, recorded and institutionalized so that they reflect the actual market value of properties and not the value attached to them by tax authorities. Thereby, the memorandum binds the Greek government that it will make all necessary adjustments to the single property tax (ENFIA) – by increasing rates or by imposing tax on more properties – in order for the State to have the same revenue. By May, the rates must be adjusted, and the tax base should widen.
Regarding non performing loans, the government pledges not to introduce new regulations or other amnesty or settlement measures for outstanding debts, nor extend existing ones, and will take action against strategic debtors.
Furthermore, in addition to reducing pensions with a fiscal return of 1% of GDP in 2019, existing pensions (excluding farmers pensions) will be recalculated on the basis of the new parameters. Also, the retirement bonus lump sums will be reviewed to “ensure actuarial justice”, i.e. they will be reduced to be proportionate to the contributions paid.
Another prerequisite for the third evaluation is that the Greek State has to complete processing of at least 30% of the main pension applications submitted between May and December 2016.
The fourth evaluation
According to the Kathimerini report, for the 4th evaluation and until April 2018, the processing of the main pension applications submitted in 2016, 30% of 2017 applications and 13,800 applications for subsidiary pensions submitted in 2015 and 2016 should be completed.
Regarding social benefits, the Greek government pledges to make a major revision of family allowances to make them more targeted and fair. On disability benefits, the new system will not be based on the “percentage of disability” decided by health authorities; as it is now, but on the applicant’s ability to work.
Regarding collective bargaining in the labour market, in March, following consultation with social partners and in agreement with creditors, the government will develop a credible administrative mechanism to assess representativeness in negotiations. In January, the mediation and arbitration process will be reviewed on the basis of an independent legal opinion. Also, in May, the draft code of labour law should be presented.
Creditors also ask for stricter criteria on the application of the Household Insolvency Act (Katseli law) that protects debtors from foreclosures and confiscations. As noted, the Greek authorities will assess the effectiveness of the legal and institutional framework of the particular law, and make a report with data gathered by the courts and the evaluation and further proposals by banks to address the shortcomings identified, in particular as regards the speed of processing of cases and the elimination of the risk of abusive practices. The findings and proposals of the report will be discussed with creditors.
For the fourth assessment, the Memorandum foresees that by April 2018, “the Authorities will amend the Household Insolvency Act, and will take additional action to address the identified shortcomings, notably by establishing an appropriate non-filtering mechanism of acceptable applications and to significantly reduce the time between the filing of the application and the issuing of the judgment.”