Greece to present post-memorandum development plan at Eurogroup on April 27

The government will present the new development plan for the post-memorandum period at the next Eurogroup on April 27 in Sofia.

According to a senior government official, the plan is of Greek “ownership” and will have three recipients: the institutions, the markets and Greek society. “We have to achieve a delicate balance: urge the markets to invest in Greece because there will be no negative surprises after the end of the memorandum and send the message that the worst is over.”

The development plan will include a specific timetable and targets for the implementation of reforms, privatisations and fiscal targets, as well as a package of planned social measures. The official said that the plan must be approved by the markets where Greece is seeking new funds. At the same time, Greece must send the message that there will be no concessions in the post-memorandum period and some freedom will be guaranteed along with targeted development and social measures.

The government’s main goal over the next years, the official said, will be the significant reduction of taxes while it is also planning to increase the minimum wage. According to sources, the development plan will be based on Portugal’s model and will be gradually implemented.

Another important date is June 21, when an agreement is expected on three fronts: the completion of the 5th review, the debt settlement measures and the post-memorandum surveillance framework in August.

The issue of fiscal figures is likely to be settled shortly after June 21. At this point, the government official appeared optimistic that there will be no problems relating to the tax free allowance threshold.

Regarding the IMF’s attitude, the same official estimated that the Fund will probably remain involved in the programme but its role has not been determined yet. This role may also be linked to the debt settlement agreement, with the possibility of the ESM acquiring most of the country’s debt to the Fund, totaling around 12 billion euros. In this case, a very small part of the debt to the IMF will remain, in order for it to have some sort of “leverage” after the programme.

On the debt issue, there is a series of measures in line with the agreement in the Eurogroup of June 2017. The main focus is the extension of the maturity of the bonds by up to 15-20 years, the extension of repayment of interest as well as the payment in the next years of about 10 billion euros by ANFA and SMPs.