Creditors see a 600 million euro fiscal gap for 2018

Approve draft budget agreement

On Sunday, Greece’s creditors presented the government with a draft agreement following its second review.

According to a finance ministry source, the draft contained certain “open issues” on the basis of which staff-level negotiations will continue.

The biggest differences between the Greek government and its creditors were over the issues of labor, education and the fiscal gap.

The finance ministry source reported a 50 million euro discrepancy between the two sides concerning 2017, but noted that this did not pose enough of a problem to prevent the new draft budget from being tabled in Parliament on Monday.  For 2018, however, the institutions stood by the assessment they had made during the previous round of talks, namely that there was a fiscal gap of 600 million euros.

Government sources noted that the deadline for concluding the second review is the Eurogroup meeting of December 5 when Athens expects an agreement on Greek debt relief measures to be reached – measures which are also linked to the size of primary surpluses after 2019.

The government aims at having hammered out a staff-level agreement by the time the EuroWorking Group convenes on November 28, which could then be ratified at the December 5 Eurogroup meeting, allowing both for progress in debt relief talks and for the International Monetary Fund’s participation in the program.

Labour minister Efi Achtsioglou resumed talks with the creditors at 13:00 on Sunday. According to sources, the ministry’s main goal was to come away with an agreement for restoring collective labor negotiations and the “extensibility” of sectoral labor contracts.

One of the thorniest issues in the talks, according to sources, was the IMF’s insistence on increasing the upper limit for mass layoffs.

It should be noted that in the critical meeting Achtsioglou is having later on in the day with the mission heads of the EU, the ECB, the EMS and IMF, she is supposed to answer the creditors whether she accepts their demands concerning the elimination of – or at the very least a doubling of – limits on collective redundancies, as well as concerning restrictions on strikes, but especially concerning the new model of labor relations and what will apply to collective bargaining agreements in the private sector. Nonetheless, the Greek side, in its desperate attempt to reach an agreement, has abandoned its “red line” regarding the issue of collective redundancies.

Reportedly, the government now says it is waiting for the European Court’s decision on collective layoffs at Heracles-Lafarge, but has demonstrated willingness to make changes to the existing framework so as to provide a preliminary approval of redundancies by the labor department, if workers and employers agree.

Ministers Euclides Tsakalotos and Giorgos Houliarakis will present the new 2-year 2017-2018 budget and measures to the creditors at a meeting scheduled for later on in the evening.