December the most crucial month since summer of 2015, Greek FinMin says
"December is the most crucial month since the summer of 2015. The stakes are high in December for progress in the Greek economy and our ability to achieve a road map we announced in the summer of 2015," Greek Finance Minister Euclid Tsakalotos said on Tuesday (29/11/2016).
Speaking in Parliament, during a debate of the 2017 budget, Tsakalotos said December 5th was a landmark date as the Greek economy hoped that the three parts of negotiation will be united (reforms, fiscal targets and debt).
"There might be another Eurogroup, but very soon we will have a picture on whether we can enter the QE program and when we will move to the abolition of capital controls, since a gradual lifting is currently underway," the Finance minister said.
Tsakalotos said that discussions with the institutions on the reforms leg were continuing and noted there were different approaches mostly on how goals will be achieved within the program in 2017 and 2018. On the fiscal targets leg, discussions are focusing on what will happen after 2018 "if we will be at 3.5 pct, or the target would fall, or if we keep a 3.5 pct target before lowering it later," Tsakalotos said and reiterated his call to the IMF to begin pressing the strong player and not the weaker player in the negotiation if it wanted lower budget surpluses for Greece.
On the debt leg of negotiations, Tsakalotos said: "I think that by January details will be available, we will know the three pieces, we will know to assess the outlook of the Greek economy in the future".
Referring to the 2017 budget, Tsakalotos said that essentially it was "mirroring the government policy on taxes and spending. It has positive messages and difficulties, as all budgets do, particularly in the period of crisis". The Finance minister said there were "people that the government was trying to support and others that were treated unfairly" but noted that the government's strategy was to lighten the burden from the most vulnerable classes and to deal with the issues of tax evasion and smuggling. Tsakalotos acknowledged there were parameter measures and noted that "if you win from such measures you gain fiscal space". He reiterated his proposal to the country's creditors to lower a budget surplus target from 3.5 pct to 2.5 pct after 2018 and to use this 1.0 pct -or around 1.8 billion euros- to lower taxes on vulnerable classes and small- and medium-sized enterprises. He stressed that since some of the country's creditors insisted that Greece's problem was not its debt but competitiveness, this was a proposal they should seriously examine.
"Our only disagreement with the institutions on 2017 and 2018 is whether this overshooting in budget revenue -achieved this year- will continue or it was temporary," Tsakalotos said.
He said the government acknowledged there were recessionary measures included in the budget, but there were also countermeasures and noted that an increase in employment meant there would be more consumers. An expected out-of-court compromise for indebted households and enterprises will offer relief and said that this measure could help to turn many non-performing loans into performing ones. "I think that the investment climate is getting better," the minister said. "I am optimistic over growth in 2017 and 2018 but we need another development model to have a sustainable growth," he said, adding that the government did not want to return back to 2008.
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