Greek Crisis: Government submits reform plan in bid for new aid deal

published at the Guardian http://www.theguardian.com/business/live/2015/jul/09/greek-crisis-reform-plan-grexit-tsipras-draghi-live

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So to recap, Greece has put forward a plan of reforms, spending cuts and tax rises that is close to what was demanded by its creditors before Alexis Tsipras called last Sunday’s referendum.

The plan includes sweeping chnages to VAT to raise a full 1 percent of GDP, moving more items to the 23% top rate of tax, including restaurants – a key battleground before.

Greece has also dropped its opposition to abolishing the lower VAT rate on its islands, starting with the most popular tourist attractions, despite firm opposition from Tsipras’s coalition partner.

Athens also appears to have made significant concessions on pensions, agreeing to phase out solidarity payments for the poorest pensioners by December 2019, a year earlier than planned. It would also raise the retirement age to 67 by 2022.

And it has agreed to only raise corporation tax to 28%, as the IMF wanted, not 29% as previously targeted.

Greece is also proposing to cut military spending by €100m in 2015 and by €200m in 2016, and implement changes to reform and improve tax collection and fight tax evasion. It will also press on with privatisation of state assets including regional airports and ports; some government MPs had vowed to reverse this.

In return, Greece appears to be seeking a three-year loan deal worth €53.5bn.

Two obvious questions — will this still be enough for creditors, or will they push for even tougher “conditionality” now we’re talking about a new bailout programme. And how will Alexis Tsipras persuade his party, including the hardline Radical Left, to support it?

One response to “Greek Crisis: Government submits reform plan in bid for new aid deal

  1. At first glance this appears to be quite some capitulation, one that suggests that the referendum was – as some posited at the time – was meaningless, since the people get more austerity either way.

    Is there another aspect to this that isn’t being made clear at this stage, that would represent a meaningful achievement for SYRIZA that they can present to OXI voters, or have the Greek gov’t simply blinked?

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