Greek government redrafts measures as talks with lenders continue

Government officials spent the weekend redrafting a proposed package of so-called countermeasures aimed at offsetting fresh austerity including calls for the reduction of corporate tax to 26 or 27 percent from the current rate of 29 percent.

According to sources, the original package presented to creditors focused on reducing value-added tax and a unified property levy and cutting social security contributions for small and medium-sized businesses but did not include the proposal for corporations. Lenders rejected the government’s initial ideas, insisting instead on a package that includes growth-boosting measures.

Greek officials and representatives of the country’s international creditors have sought to appear upbeat about the prospect for concluding the current bailout review in their public statements. But, according to sources, the conclusion of the review is more likely at a Eurogroup summit scheduled to take place on April 7 than a meeting on March 20. The original target had been a February 20 Eurogroup where it was decided that stalled bailout talks would resume.

Initial euphoria over the resumption of negotiations soon gave way to tensions after it became clear that there was little convergence between the two sides on major issues as well as technical details.

Government sources said they believed bailout monitors disagree among themselves about certain matters. There is also a sense, the same sources said, that the auditors might be dragging their feet on purpose to allow the chiefs of the creditor institutions to reach an agreement regarding Greek debt relief.

It appears that German Chancellor Angela Merkel and International Monetary Fund chief Christine Lagarde have reached an unofficial agreement: that Lagarde will consent to the IMF backing Greece’s third bailout while Merkel accepts the Fund’s demand for the fleshing out of measures to relieve Greek debt, despite the objections of her Finance Minister Wolfgang Schaeuble.

The additional detail on debt relief is a prerequisite for Greece’s induction into the European Central Bank’s quantitative easing scheme. Athens is hoping that the bailout review will have been wrapped up well before the ECB managing board’s scheduled meeting on April 27.

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