Staff level agreement in the bag, government turns to reforms

Having reached a staff level agreement with Greece’s creditors, the government is now focused on legislating prior actions as well as its proposed contingency mechanism to complete the review of its third bailout, ahead of the May 24 Eurogroup meeting, where it expects finance ministers will approve the disbursement of a tranche of 5.7 billion euros in rescue funds to cover state arrears and pay off two debt payments due in July.

To this end, the SYRIZA-led coalition will pass legislation in Parliament next week for the creation of a privatization fund, new rules on nonperforming bank loans and a host of “indirect taxes.”

In an interview with Reuters on Thursday, Jeroen Dijsselbloem, the head of the Eurogroup of finance ministers, said he expects Greece’s spending cuts and reform plans to be “done and dusted” by the May 24 summit so talks can start about what is likely to be a three-staged debt relief program.

On the issue of debt relief, he said there were “very few red lines,” when the subject was discussed at the last Eurogroup. “There were very [few] red lines, very little no-gos. The only big no-go is the nominal haircut,” Dijsselbloem said.

According to sources, the government’s main concern now is to persuade SYRIZA lawmakers to remain on board – especially members of SYRIZA’s radical Group of 53 faction that have repeatedly expressed their opposition to the measures, and privatizations in particular.

However, buoyed by the positive outlook it has cultivated since the previous Eurogroup meeting earlier this week, government officials assert that it will be difficult for any MP to raise objections now that the negotiations are in the final stretch.

And in this bid to get the party to rally behind it, the government is expected to continue its acrimonious exchanges with main opposition New Democracy.

Moreover, although the prospect of cabinet reshuffle is not likely in the short term, the government will likely include it in the public debate so as to keep MPs on their toes and prevent them from veering from the party line.

The meeting on May 24 is not expected to debate the key Greek demand of debt relief, which will most likely be deferred until after the summer.