Brussels, 17/07/2013 (Agence Europe) - The autumn will be heated for the Greek structural adjustment programme because it will become clear whether there is a financing gap to be filled in the final months of implementation of the Greek Memorandum in 2014, explained the European Commission on Wednesday 17 July.
Simon O'Connor, spokesman for Euro Commissioner Olli Rehn, said: “The first thing to stress is the progress - that Greece is fully funded for the next financing 12 months. Beyond that, the existence of a relatively small financing gap, in the final month of the EFSF programme, is not new and has now become public knowledge”, expressing astonishment at the fuss over the publication that morning of a report on an imminent €10 billion funding gap. The Commission says the gap will not be anywhere near that high, noting in a compliance report in May 2013, that it would be between €2.8 billion and €4.6 billion by the end of 2014,
A clearer picture will emerge in the autumn when the income from the privatisation programme is known, along with the capital needs for the financial sector. On the second issue, positive news may well emerge because the €50 billion set aside for recapitalising and restructuring Greek banks may be much more than required due to higher participation from the private sector. This could provide an “unused buffer which could potentially be used to reduce financing gap”, said O'Connor.
In the autumn, banks will face stress tests that will give more details of the health of the Greek banking system.
O'Connor confirmed the announcement by the Greek prime minister, Antonis Samaras, of a reduction in value-added tax (VAT) from 23% to 13% for cafes and restaurants. The country's troika of lenders (the European Commission, European Central Bank and International Monetary Fund) says: “A reduction in the VAT rate for the restaurant sector would be possible without running any budgetary risks, so long as it was just a temporary measure”, from 1 August to 30 December 2013, said O'Connor.
He added that Greece's short-term financing is on track. On Tuesday evening, the Greek parliament approved a 110-section new law required for the disbursement of a €2.5 billion sub-batch of aid, with the final vote planned for Wednesday evening. A European source said this should pave the way for the EU Council of Minsters' euro working group to meet by video link on Wednesday 24 July and give the go-ahead for the payment. (EL/transl.fl)