Paris talks have reached a deadlock and Greece’s troika of international creditors from the European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF) are looking at extending the country’s bailout program. An official from the troika said on Wednesday that a six-month extension to the current program seems possible following the gridlock in the Marathon negotiations.
Most of the haggling has been over a projected fiscal gap in the 2015 budget. Failure to strike a deal by the December 8 deadline means that the Greek government won’t be able to keep its pledge of quitting its 240 billion-euro ($300 billion) bailout by the end of 2014.
The main issues of discontent:
* An official from the Greek Finance ministry pinpointed the “number one” issue being the fiscal gap for 2015. A Greek official said that “the timetable is very tight.” Meanwhile, a European source said that the troika would like to see the new law for debt settlement in 100 installments to be scrapped altogether.
* The troika is not satisfied with structural changes in social security thus far and is seeking to see pensions immediately reduced. They also want the pension age to be lifted but believe that this should be done gradually over a five-year period.
* Troika wants businesses to be excluded from the recent law that allows for debt settlement in up to 100 installments.
* Troika believes that there should be a common salary chart for the public sector or, at the very least, a reduction of “extra” bonuses and overtime.
* International creditors are seeking to have VAT rates increase and for VAT exemptions on some islands to no longer apply. They want the reduced 6.5% and 14% VAT rates for items that are considered basic needs to be lifted.
* The troika would like to see Greek labor law to include mass dismissals and changes to the way decisions for strike action are structured as well as changes to the law on unions.
Sources on Wednesday said that discussions with the troika had not resulted in a date being set for the return of troika’s representatives to Athens for a review prior to the Eurogroup meeting on December 8. Nonetheless, the extension of the bailout has yet to be discussed.
EC representative Declan Costello said that the talks in Paris had been “intensive and constructive” and said that they would continue.
The markets have been negative concerning Greece’s early exit from the program with Greek government bonds having slumped and Greece’s 10-year bond close to 8%.
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