Athens affirms tax-free ceiling pledge to secure tranche

Finance Minister Euclid Tsakalotos reaffirmed Greece’s commitment for the reduction of the tax-free ceiling at Friday’s Eurogroup meeting, a pledge that appeared necessary for the eurozone ministers’ decision to disburse the 972 million euros due to Athens.

Notably, as the general election approaches, Tsakalotos and the government have not ruled out that the measure may not be implemented. However, the statement by the Eurogroup could not have been any clearer. It welcomed the reaffirmation by the Greek authorities of their commitment to “continue implementing basic reforms, mainly the expansion of the tax base and other tax reforms.”

With this statement on Friday in Bucharest, the Eurogroup sealed the payout of the profits of eurozone central banks from holding Greek bonds, which have been due since last December.

“By early May the money will have been disbursed,” promised European Stability Mechanism head Klaus Regling, as some time is needed for the ratification of the decision by some national parliaments.

What has become clear from the experience of the last few months is that the Europeans play tough on issues they especially care about, such as the reduction of nonperforming loans. The negotiations on the framework to succeed the Katseli law on the protection of borrowers’ primary residences went on for more than two months, with the Greek side forced to yield to the pressure for changes by its creditors. The pressure for the other pending issues was much gentler.

Now the Greek government is moving in the direction of implementing all measures agreed so as to play the IMF debt repayment card. At Friday’s press conference Regling acknowledged that the part of the debt to the International Monetary Fund, some 3.5 billion euros, is very expensive as it bears an interest rate of 5 percent, “far above what Greece nowadays pays the markets.” However, the issue splits the creditors, with the ESM being in favor of the early repayment, and a number of countries, including Germany, opposing it.