Prime Minister George Papandreou is pressing his ministers to redouble their efforts over the summer so the new raft of austerity measures and reforms can be implemented by September.
Papandreou held a series of meetings with several of his ministers last Tuesday to set out an action plan. As the Greek Parliament is gearing up to vote on a barrage of draft laws within the next few weeks, the government is about to introduce legislation aimed at meeting the requirements of its midterm austerity agreement with Greece’s international creditors.
Within this month alone, Prime Minister George Papandreou and Finance Minister Evangelos Venizelos need to push through a number of controversial reforms regarding public sector salaries, streamlining the state, managing public assets and funds, revamping the tax system and buttressing Greek banks. A general secretariat is expected to be introduced within July that will be tasked with recording and evaluating state-owned real estate assets, as well as drawing up a plan for the development of tourism-related assets.
Also within the month, the government will have to draw up a blueprint regarding the abolition and merger of defunct or underperforming state bodies, as well as for slashing state expenditure by imposing an across-the-board salary structure for the civil service and introducing cost-cutting measures. This means placing supervisors in all ministries to review all of their expenditures and accounts.
In an even tougher challenge, the government has until the end of the month to table its plan for reducing the number of employees in the public sector by 2015, as well as monitoring monthly inflows and outflows. In the same period, the Bank of Greece must assign specialised personnel to Greek banks and to staff the Financial Stability Fund in order to complete a study on the quality of the banks’ loan portfolios and the adequacy of their provisions.
Banks that are in poor shape in terms of capital adequacy (according to the results of recent stress tests) have until September to carry out a capital increase and restructuring. In terms of the labor market, the government has just a few weeks in which to introduce legislation for cracking down on unregistered labor, and until September to conduct a study on the effects of the liberalisation of a number of closed professions on competitiveness and prices. In a related reform, the government has until the end of July to prepare a report on the contribution of tourism and trade to growth and employment. It also has 90 days in which to simplify procedures for the export of goods.
In a recent interview with Reuters, Venizelos said that he would be presenting parliament next week with a plan to combat tax evasion and to improve the tax collection mechanism. According to the mid-term agreement, the government has three months to introduce a centralised administrative body that will be in charge of collecting debts owed to the state. It also needs to begin the process of closing down 200 tax offices by the end of the year and get a tax court up and running by the end of September, by which time it will also have to present a new national taxation system. By the end of August, all ministries will have to submit studies regarding social security programs and benefits, as well as pension funds and subsidiary insurance funds.
The health sector will also be the subject of a study expected by the end of August, which will assess the performance and staff needs of the hospitals in the country. Meanwhile, representatives of the main conservative opposition, New Democracy, elaborated on the counterproposals for fiscal overhaul outlined by party leader Antonis Samaras in his “Zappeio II” speech in mid-May.
In an interview with the Wall Street Journal published on Tuesday, Samaras insisted that the plan the government has drafted with its international creditors is destined to fail. “In three months we’ll be asking for more money,” he said. Samaras reiterated calls for a renegotiation of the terms of the midterm program with an emphasis on cutting corporate taxes and giving the sluggish economy a “creative shock”.