More cuts loom as bill goes to vote

Lawmakers are on Tuesday night set to vote on a new round of prior actions demanded by creditors in exchange for a further 1 billion euros in bailout loans, a package that is widely expected to pass as contentious reforms including a pension overhaul and a new tax bill have been put off until January.

The new multi-bill of measures foresees the creation of a new privatization fund, to be jointly supervised by Greek and foreign officials, the partial sell-off of Greece’s power transmission operator ADMIE, regulations allowing the sale of some nonperforming loans held by Greek banks, and a unified wage structure for civil servants.

Although some of the measures have prompted objections by coalition MPs, the government is not expected to suffer any defections on Tuesday.

A key reason is that authorities won some time by putting off until January hugely unpopular plans for pension sector reform and postponing until mid-February a decision on whether the mortgages on first homes and loans held by small and medium-sized businesses will also be opened up to a new market selling NPLs. The regulations going to a vote on Tuesday night only concern loans held by large corporations, with a staff of more than 250 people and a turnover in excess of 50 million euros a year, and mortgages on properties that are not first homes.

Nevertheless Prime Minister Alexis Tsipras has come under fire for conceding on another “red line” he had once promised not to cross, namely the sale of loans and mortgages to so-called distressed debt funds.

In a bid to keep control of SYRIZA ahead of Tuesday’s vote, and with a difficult January looming, Tsipras has been meeting with leftist MPs.

Key government ministers did their best to justify their policies during a tense debate in Parliament on Monday. Faced with a barrage of criticism from the opposition, Finance Minister Euclid Tsakalotos declared, “I’m doing what I can under difficult circumstances in here and out there.”

Assuming the multi-bill gets the green light on Tuesday night, Greek officials must take a series of actions, mostly administrative, on Wednesday to clinch the release of the 1 billion euros by Friday. The Euro Working Group is to convene on Thursday night and is expected to approve the release of the bailout cash despite some fears about delays.

But it was clear, even before Tuesday’s vote, that creditors expect much more from Greece. In comments at an investors’ conference in New York on Monday, the International Monetary Fund’s envoy to Greece, Delia Velculescu, said the government’s proposals for pension reform would need to be improved if the country is to meet primary surplus targets. She also repeated the Fund’s insistence on the need for the country’s debt to be reduced.