Brussels, 14/01/2013 (Agence Europe) - On Monday 14 January, the European Commission welcomed the reforms introduced last week by the Greek authorities. “This reform was one of two milestones agreed by the Eurogroup in December in order to reach a precondition of the next tranche funding”, said Simon O'Connor, spokesman for Euro Commissioner Olli Rehn (see EUROPE 10751). He added: “The board of directors of the EFSF will decide whether to approve the next disbursement”, of €9.2 billion, with €7.2 billion of which for recapitalising Greek banks. The remainder will cover administration and servicing the debt.
With the new reforms, Greece hopes to net €2.5 billion in tax this year from a rise in income tax for the liberal professions, ship-owners and those earning over €25,000 a year. Income below €25,000 will be taxed at 22%, from €25,001 to €42,000 at 32% and anything above that at 42%. Greek Finance Minister Yannis Stournaras defended the new belt-tightening: “Every euro we get with this bill is one euro less in reduction in salaries and pensions”, he said in a debate in the country's parliament.
At the December European Summit (see EUROPE 10752), Greek Prime Minister Antonis Samaras said that the International Monetary Fund (IMF), another of the country's lenders, would be deciding this month on the disbursement of €3.5 billion. The IMF's board of management is expected to examine Greece on Wednesday 16 January. In December, Christine Lagarde, the IMF director general, recommended that the cash be disbursed.
IMF tones down austerity calls. On Monday, Lagarde defended the Greek austerity programme, which has come under fire since two IMF economists admitted that they had been wrong about the impact of austerity policies (see EUROPE 10758). In an interview with the BBC, she said: “What technical analysis and the history of crisis management tells us is that you're better off doing it strong and hard at the beginning in order to reap the benefits of the process. Greece has done huge and massive efforts in cutting expenses, in bringing the deficit down, in turning to primary equilibrium if not surplus now, which is the good news. The country is going to turn out better results than what was even planned. But it has to do a massive effort on collection of revenue and of tax. We forecast the eurozone to be delivering growth in 2013, which is better than the recession in 2012. So, there is an improvement and the beginning of a recovery”. (EL/transl.fl)