Troika representatives to discuss possibility of measures on Friday

The troika representatives visited the Minister of Finances Yannis Stournaras yesterday, despite the previous uncertainty and confusion regarding the troika’s return to Athens. The initial talks were conducted in a positive climate, mostly because the prior actions were not discussed.

The troika executives plan on visiting the Ministries of Labor, Health and Administrative Reform before returning to the Ministry of Finances to begin discussions. The meeting with the Minister of Administrative Reform Kyriakos Mitsotakis will take place at noon on Friday.

The question on everyone’s mind is whether the troika will demand that the Greek government takes measures to cover the 2014 budget gap. Even defining the budget gap is a point of contestation, with the Greek side estimating it to be up to 500 million euros, while the troika executives believe it to be between 2.5 and 3 billion euros.

With the government having to submit the 2014 budget in Parliament by the 21^st of November, time is of the essence for Greece. The Deputy Minister of Finances Christos Staikouras released data yesterday which indicate that the public revenue in October was 24% above the monthly troika goal.

The troika however will base its estimations and proposals on three basic parameters; firstly that the Ministry of Labor’s measures that were included in the latest bill on tackling tax evasion will cover the 2014 gap. Secondly the rate of progress in restructuring the tax collection mechanism, which is plagued by delays. Thirdly, how the government’s increased revenue could be used to cover other gaps.

New demand for heating oil

While the critical troika review is awaited before the negotiations can begin proper, the government is going to request a reduction of the taxes on heating oil. The recent reduction of the VAT on food (from 23% to 13%) will be used as an example of how such a reduction could increase consumption and tax revenue overall. The government hopes to reclaim some of the 800 million euros from taxes it estimates to have lost as a result of the exorbitant prices.