FinMin assures partners on program; search for measures goes on

Finance Ministe Yannis Stournaras sought to assure his eurozone counterparts during a teleconference on Friday that Greece would meet the targets in its fiscal adjustment, as the government seeks more measures to make these goals more attainable.

Greece was not on the agenda during Friday’s Eurogroup conference call but sources told Kathimerini that the chair, Luxembourg Prime Minister Jean-Claude Juncker, did ask Stournaras about how the new Greek government is progressing with its fiscal policy ahead of a troika visit next week.

Stournaras set out the measures the coalition is planning to take this year, when it has to make a further 3 billion euros of savings, and over the next two years, when some 11.5 billion euros has to be cut.

The government has identified where most of these savings will come from but still has to finalize the spending reductions before representatives of Greece’s lenders arrive in Athens. Sources told Kathimerini that one of the steps being examined is to withdraw tax breaks for families that have a combined income of more than 40,000 euros but to retain them for those earning under 30,000 gross.

There are about 350,000 families in the 30,000- to 40,000-euro income bracket and reducing their tax exemptions by 50 percent would raise some 400 million euros for public coffers. Some 550,000 families had incomes of more than 40,000 euros in 2010. Their tax breaks come to 1.8 billion euros, meaning the government could earn another 900 million by halving them.

The government hopes it will do enough next week to convince the troika it is serious about meeting the fiscal targets but the lenders’ report on the Greek program is unlikely to be ready before August 20, when a 3.2-billion-euro bond held by the European Central Bank matures.

As things stand, Greece does not have the money to cover the government note. Greece is expected to have a budget surplus of 1.3 billion euros at the end of July but is expected to run a substantial deficit in August, meaning it will have either to receive a bridge loan or a different solution will have to be found to avoid default.

European Commission Monetary Affairs spokesman Simon O’Connor said on Friday that a “technical solution” is being sought, without going into details.

“Simply because we haven’t explained precisely what [solution] will be found doesn’t mean we’re not working on it,” O’Connor told journalists in Brussels. 

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