The exchange for the next tranches will prove a daunting task for the Greek people. In its report accompanying the release of the 2.2 billion dose, the IMF sees a primary surplus of 5% from 2014 onwards. It also describes the hidden measures of 29 billion for the 2013-2014 period, which include cutting of pensions.
According to the report, the financial targets have been redefined and require greater efforts to adapt to a primary surplus of 5% of GDP in 2014 (instead of 2.8%) with the expectation that they will not fall below 4% by 2020.
The agreed objectives of the program will be maintained for 2012-13. However, a significant effort is already required for this year: 8% GDP measures for the objectives of the 2011-12 biennium (about 16 billion euros) and an additional 6% of GDP (another 13 billion) for 2013-14 to achieve the primary surplus of 5%.
The report describes the main lines and where the figures of new measures of 2011-2012 will come from:
-additional 2 billion revenue this year and another 8 billion in 2012, mainly from cuts in tax breaks and about 4 billion by 2012 from the property fee on PPC bills
-a total of 1% of GDP or 2 billion from pension spendings affecting by ¾ the main and supplementary pensions
And all this at a very difficult economic and social environment, with recession at 6% in 2011 and 3% in 2012, and unemployment at 17% this year and 19% in 2012.
Te report also provides for a review of the parameters of labor law in the labor market. The authorities intend to open a dialogue with the social partners on the national collective agreement before the end of the year.
The report's authors say that "while maintaining a minimum wage and basic conditions of security for all employees is of paramount importance, the level of the minimum wage -which has grown rapidly in recent years and is relatively high- should be reconsidered."
Also, that it is necessary to reach an agreement with bondholders for the new PSI. "The previous agreement of July 21 could not have been operational." The public debt is expected to peak at 187% of GDP in 2013 and decrease to 152% by 2020. The purely external debt is expected to peak at 128% of GDP in 2012 and drop to 96% by 2020.
With almost global participation of individuals in an exchange of debt to 50%, with a low coupon bond, and with new EU support at a rate of about 4%, the debt could reach 120% of GDP by 2020 (the maximum level considered sustainable for the country's access to the bond market).
However, if participation is smaller than the debt, it could be stuck at 145% of GDP.
Thus, a sustainable situation in the debt will depend on whether the negotiations achieve their goal of a 100 billion impairment as long as there is universal participation.