Finance Minister Gikas Hardouvelis on Wednesday met with Labor Minister Yiannis Vroutsis ahead of the Troika head officials’ arrival, who are expected to meet with Hardouvelis today and with Vroutsis tomorrow.
Pending issues ahead of Troika visit
The pending issues in the negotiations between the Labor Ministry and the Troika of Greece’s international lenders include the change of the law on unions, the further cut of the labor cost, the evaluation of the insurance system reform progress and the government’s proposal for the settlement of arrears to social security funds.
Greece will make a new attempt to borrow from international markets through the issue of a three-year bond
The Greek finance ministry yesterday officially announced that Greece will make a new attempt to borrow from international markets through the issue of a three-year bond worth 2.5-3.0 billion euros. Sources at the ministry said that the interest rate is expected to be set at 3-3.5 percent.
The Bank of America, Merrill Lynch, Deutsche Bank, Goldman Sachs, Citi, JP Morgan, Morgan Stanley, Nomura, HSBC, UBS and BNP Paribas were acting as joint bookrunners.
A further decline in the interest rate of six-month Treasury bills (from 2.15 pct to 2.05 pct) in Tuesday's auction was considered to be a "good omen" for Greece's return to international markets, the second this year. Greece returned to international markets in April, with a five-year bond, after a four-year exclusion.
The finance ministry announcement said that bond issue will be issued in euro, under English law, and the transaction will take place "in the immediate future, provided that market conditions allow this".
Finance Minister Gikas Hardouvelis announced on Wednesday that the extraordinary measures taken over the last four years will be gradually abolished, as the Greek economy is reverting to normal.
The Ministry is currently examining the efficiency of the applied measures in combination with the social impact they have had, in an effort to proceed to tax reductions or even the abolition of some of the measures.
“We have to definitively establish a tax system that will be simple, consistent and long-lasting, gradually abolishing the extraordinary tax measures and adjusting tax burdens to the standards of the eurozone states,” said Hardouvelis, although he added that “we are continuing to apply a measured and balanced fiscal policy.”
As a basic condition to end the extraordinary measures, he set “the creation of a modern tax administration to support the tax reduction.” In this context the government will take specific initiatives through which “we will not only correct injustices, but also secure crucial financial resources” that are necessary for “reducing the tax burden of law-abiding taxpayers” and “in the future financing some redistributive policies for the benefit of the weakest social groups.”
EFSF has 'invested in Greece'
European Financial Stability Facility (EFSF) CEO and Managing Director of the permanent European Stability Mechanism (ESM) Klaus Regling met Greece's new Finance Minister Gikas Hardouvelis, on Wednesday.
"We have invested in the future of Greece," Regling said after concluding his meeting with Hardouvelis, adding that "in the last three years EFSF has provided more than 141 billion euros to Greece, and shoulders more 43 pct of the Greek debt." He referred to the EFSF "having invested in Greece," noting that the average duration of Greek debt held by the EFSF was 32 years.
Hardouvelis stated that over 60 percent of the financial assistance EFSF has provided to European countries has been given specifically to Greece on very favourable terms, so that each Greek household benefited with annual savings of about 3,000 euros.
The head of EFSF and ESM welcomed the significant efforts Greece has made in recent years
The head of EFSF and ESM welcomed the "significant efforts Greece has made in recent years". While recognizing that economic reforms and fiscal adjustment have proven difficult and painful for many Greek citizens, he nevertheless urged them to also look at the positive results that have been achieved. "Greece is slowly becoming competitive again and, despite the unacceptably high unemployment rate, it is gradually improving and investors have begun returning," Regling assessed.
Hardouvelis commented that "We, as Greeks, have to reform our economy and we believe that Europeans, on their side, will do their duty." Regling went on to meet with the new Bank of Greece governor Yannis Stournaras, Hardouvelis predecessor at the finance ministry.
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