The compliance report on Greece that the European Commission released yesterday may have opened the way for the Eurogroup to formally complete its bailout evaluation, but it makes clear definitively and irrevocably that the clean exit that the government was peddling will be anything but clean.
It underlines that the progress that has been achieved must be expanded and ensured through enhanced supervision.
Simply put, one must forget what one hears about liberation of the country and the economy from the ills of the creditors, because the memorandum may have ended, but its commitments and the constant, strict supervision remains.
The Commission’s report makes clear that there is a full commitment of Greek authorities to continue implementing decisively the economic and fiscal policy in the long term, building on the reforms of the third memorandum.
In order for some people not to cultivate delusions, it clarifies that pension cuts will be implemented, as will the lowering of the tax-free threshold.
Concerning what government cadres are propagating about compensatory handouts from overreaching primary surplus targets, it refers to unpredictable factors as regards possible judicial rulings, and underlines that the government has clearly provided for measures if such an eventuality arises.
The report also notes that a new increase of the tax valuation of real estate is coming, because the government has committed itself to hike the valuations two more times – both in 2019 and 2020. Fifty percent of the difference will be covered in 2019 and another 50 percent in 2020.
The rest of the bill will be revealed incrementally, so as not to scare citizens.
It is positive that Greece is exiting the memorandum, but what is in store is a hefty package of fiscal measures that will have grave repercussions on broad swathes of the public.
The celebratory rhetoric that one will hear over the coming days serves governmental objectives, but it is a far cry from the reality we will experience from now on.