Greece: countdown to the default – Les Echos

Negotiations resumed Sunday night in Brussels. The finance ministers of the eurozone hope to make a decision on Thursday.

Negotiations between the Greek government and its creditors resumed in pain in Brussels during the weekend. A new meeting was scheduled last night. The country is now closer by the hour of default. Moreover, the German Vice-Chancellor and Economy Minister, Sigmar Gabriel, warned Sunday that “not only the time is running out, but throughout Europe, patience also.” Adding, according to an article in the “Bild”: “More and more people think that they are led by the nose by the Greek government. [...] Throughout Europe, there is a growing sense: enough. “

Ideally, an agreement should be found today, Monday, in order to be submitted to the vote of the Greek Parliament on Wednesday, on the eve of the meeting of Eurogroup scheduled on June 18 in Luxembourg. The finance ministers of the eurozone would then be able to endorse the payment of € 7.2 billion remains to be disbursed under the aid plan, and to decide on a further extension of the program, probably up in March 2016.

The technical détaut of not rule out payment

The following week, the Bundestag and other parliaments nationals who must vote on the subject (Finland, Netherlands) could then give the green light to the agreement and new financing measures to allow Athens to receive funds in time to repay 30 June – in time and time -. the maturity of € 1.6 billion owed to the International Monetary Fund (IMF)

But on Sunday, no one was even able to bet on this place and to remove technical default. Representatives of the European Commission, the European Central Bank, the IMF and ESM rescue the eurozone the fund, still evoked many difficulties, while members of the Greek delegation, Ioannis Dragasákis, Chief Negotiator, Euclid Tsakalotos, Deputy Foreign Minister, Nikos Pappas, the right arm of the Prime Minister Alexis Tsipras, talking, them clear progress … The negotiation is built around the level of primary budget surplus (calculated excluding debt service) asked Greece and from which is deducted the amount of savings to be made by Athens. The creditors demand a surplus of at least 1% this year and 2% in 2016 and 3% in 2017. The Greeks call for 0.75% this year, but could make concessions, if Europeans promise them relief debt. They would be willing to give up such a reduced VAT rate for the Greek islands.

public expenditure Transfers

There remains the thorny issue of pensions (9% of Greek GDP against 3% of GDP in Germany), the Greek government no longer wishes to reduce. The average basic pensions paid in Greece (by public systems) according to the IMF would reach 1.152 euros, against 1,287 euros in Germany, whereas the Greek average wage is half as high as in Germany. Yesterday was the turn of Italian Prime Minister Matteo Renzi warn it would not help Greece to pay generous pensions, while he himself is engaged in a difficult reform in the peninsula. To reduce the numbers of civil servants, Greek governments have resorted to early retirement, transferring public expenditure on another …

In Athens, Prime Minister Alexis Tsipras expressed ready to “a difficult compromise,” while still calling for a “viable” agreement. Among creditors, each calculated its “Greek risk.” “Obviously we are preparing for a crash, even if only to try to assess its impact on our national financial system and our trade,” says a European leader. Without an agreement, Greece will have to quickly implement capital controls to prevent bank failures. However, the Greek administration is so faulty that some already underline that Greece is more likely a scenario for argentine (boom and successive devaluations of poverty) than that of a rapid recovery in the Cyprus.