Tuesday, April 5, 2011

EU, IMF to press Greece on fiscal plans, privatisations

An inspection team for Greece's international lenders will this week press the country to deliver on promises to make extra budget savings over the next three years and speed up privatisations.

The EU and International Monetary Fund inspectors starting a three-day visit on Tuesday will scrutinize a draft 2012-2014 budget plan, a key condition of Greece's 110 billion euro ($156 billion) bailout.
Against a backdrop of concerns that fiscal shortfalls and persistent economic weakness might eventually force the country into a debt restructuring, they will also review how plans to target proceeds of 50 billion euros from privatisations are progressing.
Greek officials have said that two thirds of the measures being considered for the 2012-2014 budget plan would focus on spending cuts and one third on revenue increases.
The country must overall achieve savings of about 8 percent of GDP in 2012-2014 to meet targets set by the lenders when they rescued Greece from bankruptcy last year.
"The conditions are tough, the environment is adverse and uncertainties are big," central bank chief George Provopoulos told To Vima newspaper over the weekend.
"But we have a chance to improve the situation as long as we are fast, daring and imaginative in implementing a coherent plan for the use of state property and create attractive opportunities for foreign investors."
Among steps being considered to achieve the necessary savings are an end to some tax exemptions for high income earners, including on interest paid on a first mortgage.
"We will discuss the medium-term plan on the expenditure and revenue side, restructuring in state-owned enterprises and privatisations," said an official close to the troika of European Commission, IMF and European Central Bank officials.
The official said talks were likely to focus on the principles guiding the privatisation exercise rather than discuss figures. "Greece just appointed advisers, we are still in the exploratory phase," the official told Reuters.



 
By Ingrid Melander
source: Reuters