Athens Macedonian News Agency: News in English, 16-04-26

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From: The Athens News Agency at <http://www.ana.gr/>

CONTENTS

[01] Social security, pension reform bill approved in parliamentary committees

[02] Government's negotiations with institutions are continuing, 'red lines' have been preserved

[03] Completion of Greek programme review positive for economy, mixture of policy a concern - report

[01] Social security, pension reform bill approved in parliamentary committees

Individual provisions were also been heavily criticized by representatives of unions as well as social and professional bodies participating in today's meeting. The debate on the articles of the bill at the plenum has been set for May 5 (Thursday).

[02] Government's negotiations with institutions are continuing, 'red lines' have been preserved

According to the sources, negotiations have concluded on the measures totaling 3 pct of GDP foreseen in the July agreement that target a 3.5 pct primary surplus in 2018. Of these measures, which correspond to 5.4 billion euros, the government has already implemented measures worth 2.8 billion euros, while the rest 2.6 billion will be taken during the next 2.5 years, with an average yearly burden of 1.1 billion euros.

Concerning the International Monetary Fund (IMF), the same sources said it is ignoring the official Eurostat data and questions whether these measures are enough to achieve the primary surplus target of 3.5 pct in 2018. They also said this is a point of contention between the Fund and the European institutions.

To achieve a compromise between the IMF and the European institutions and keep the Fund in the Greek program, the recent Eurogroup asked Greece to take package of contingency measures in case the targets are not achieved, which would be activated automatically, be reliable, objective and approved by parliament.

However, the government clarified that passing legislation preemptively is contrary to Greece's constitution and the international legal system. Any laws passed by the Greek parliament have immediate effect and they only lapse when a new law is passed. It also explained that passing contingent measures creates a negative economic climate as it anticipates the failure of the program and deters investment.

The government sources also said they had counter-proposed the establishment of a permanent mechanism for an automatic correction of public finances, which will be activated in case of deviation from the targets and which covers all aforementioned conditions stated by the Eurogroup.

[03] Completion of Greek programme review positive for economy, mixture of policy a concern - report

The report, although it expressed reservations over the final "policy mixture" of the first review, underlined that completion of negotiations would be positive for the Greek economy for several reasons. Among others, it will contribute to stabilize and improve the political and economic climate in the country, supporting banks and smoothening funding conditions of the economy from the banking system. At the same time, completion of a review will lead to the inclusion of Greece in European Central Bank's bond-buying programme.

The report noted, however, that a package of measures on the pension and tax systems were expected to negatively affect the economy, but stressed that the final result would be positive. "With an agreement…conditions would be created to avert a prolonging of a condition characterized by increasing burdens on the private sector, reducing incomes in the public sector, limiting capital movement, an exit of enterprises to neighboring countries…", the report said, adding that the economy was not expected to recovery automatically soon after completion of the first programme review, unless uncertainty over future policy was eradicated, governance rules changed and the necessary reforms were made. "Greece has no other option but to implement a third memorandum (with the necessary improvements where possible," the report said.

The Parliament's State Budget Office noted that a prolonging of negotiations –expected to be completed in October/November 2015 according to initial plans- had a significant cost, such as a recession in 2016, extending an economic contraction for the ninth successive year with an accumulated GDP loss of around 28 pct and an unemployment rate of above 24 pct. The report criticized lack of government policy on growth and said that a spending cut policy was focusing on the wrong points such as freezing payments to suppliers and tax returns, undermining the real economy.

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