Bridging the distance on Greece’s 2020 budget

The government will try to bridge the gap between its own estimates regarding the 2020 budget and those of the country’s creditors before it tables its first draft on October 7.

The main target is to conclude the fourth post-bailout assessment successfully, with a positive statement by the creditors at the end of November to be ratified by the December 4 Eurogroup. This is also when a decision will be reached as to how eurozone central banks’ earnings from Greek bond holdings will be included in the 2020 budget, which could plug any gap that may remain until then.

In its ongoing talks with the creditors’ mission chiefs in Athens, the government is open to additional measures to narrow the distance, one Finance Ministry source said. He added that these measures will not be in the form of new taxes or spending cuts, but structural interventions, such as increasing online transactions. He also said that no one has mentioned cutting the tax-free threshold again.

Finance Minister Christos Staikouras met again with the mission chiefs on Tuesday, and on Wednesday the negotiations will conclude and the eurozone officials will depart. The International Monetary Fund representatives leave on Friday.

Labor Minister Yiannis Vroutsis also met with the creditors’ top representatives and informed them that the verdict of the Council of State over the future of the Katrougalos law on pensions will determine the extent of future ministry interventions in the social security system.

In the first meeting between the two sides on Tuesday, Vroutsis presented the government’s central planning on labor, social security and welfare issues, with the creditors’ officials “listening rather than asking questions,” according to a ministry source. The same source added that there was a very good atmosphere at the meeting and that the fourth post-bailout assessment ended without any objections or asterisks for the Labor Ministry.

The mission chiefs also met on Tuesday with the heads of the country’s four systemic banks and discussed the government’s initiatives for the speedier reduction of the credit sector’s stock of nonperforming loans through the creation of an asset protection scheme, as well as the issue of the reform of the bankruptcy code for individuals and corporations.