It has been 38 days since the troika representatives last came to Athens for talks and today they have arranged to meet with the Ministers of Finances and Labor. Last night the Prime Minister held a meeting with his cabinet ministers to plot the government’s main line of defense for the negotiations to take place today.

The troika’s main argument is to address measures to cover for the 2014 budget, before tackling the 6-to-5 billion euro funding gap. The main points of discussion between the Greek government and creditors are:

  • Measures worth 2.9 billion euros: While the Minister of Finances has spoken about the possibility of having to make “structural interventions” worth 500 million euros, the European Commission has consistently argued that at least 2.5 billion euros worth of measures must be implemented. With the deadline for submitting the 2014 Budget in Parliament being the 21st of November and Eurogroup sessions scheduled for the 14th and 22nd of November, time is running out for Greece.
  • Suspensions and dismissals: Despite the announcements and fanfare, the government has not yet completed the first wave of 12,500 public sector suspensions, which will make it hard to claim an extension for the second wave of 12,500 suspensions by the end of the year. The Greek government has also committed to 4,000 dismissals by Christmas and the troika will only accept 2,000 of 2,600 ERT dismissals towards this div, claiming that contracted employees and dismissals for misconduct do not count. The Minister of Administrative Reform Kyriakos Mitsotakis will meet the troika envoy at noon on Friday.
  • Insurance reform: Vroutsis’ plan promises to save about 500 million euros by tackling the serious contribution evasion. The troika has two main reservations about the Mr. Vroutsis plan; firstly whether Mr. Vroutsis will even be able to realize his ambitious plan in the first place and secondly whether he will collect enough to cover for the insurance funds, which are expected to need 1.5 billion euros more this year.
  • New real estate tax: With injustices in the new real estate tax being highlighted almost on a daily basis, the Minister of Finances will seek out a compromise with the troika. The creditors have not abandoned the idea of collecting the controversial tax via DEI’s bills, which could gain wider support if the government MPs cannot come to a mutual agreement.
  • Defense industries: One of the four prior actions to collect the 1-billion-euro loan installment is the restructure of the domestic defense industries, EAS and ELVO. The government has suggested splitting the military and civil operations of the companies (and maintaining the military operations), however the troika demands that they shut down immediately, disregarding the contracts with foreign customers the companies have signed, as well as the critical needs of the Greek Armed Forces.
  • Tax evasion: The IMF has consistently argued for greater efforts in combating tax evasion, particularly those with huge assets. If the government fails to make any significant gains from tax evasion, the troika will increase the pressure for further expense cuts/
  • A new “TAIPED”: Privatization fund TAIPED announced that it will fall short of its revised 1.5 billion euro target, which was reduced from 2.6 billion euros. This means that the missing 1.3 billion euros will be added to next year’s target, meaning TAIPED must generate 3.9 billion euros from privatizations. The troika is pressuring for a new “TAIPED” that will expedite procedures for 4 billion euros worth of privatizations. Despite rumors suggesting the new fund be based in Luxembourg, this new TAIPED will be based in Athens.