Greece’s creditors have expressed concern to the government over delays in carrying out auctions of seized properties, which are crucial in reducing banks’ non-performing loans and stabilising the banking system, and over a spate of social welfare benefits and handouts from the government over the last several weeks.
The creditors are carefully reviewing a 600-pages omnibus bill tabled by the government in parliament, which includes 50-60 preconditions for closing the third bailout evaluation, in two weeks. The preconditions were discussed in a teleconference between finance ministry officials and representatives of the country’s lenders.
VAT tax discount for islands extended
In mid-December, the government announced a six-month postponement of the 30 percent hike in the VAT tax on islands that have been hit hardest by the migration crisis (Lesvos, Chios, Samos, Kos, and Leros). The creditors had approved the exemption for a limited time, and it was to have expired at the end of last year.
The government’s request for a one-year extension was denied by creditors, on the grounds that a two-tier VAT scheme increases administrative costs and grows the bureaucracy.
IMF not amused
Hence, the government decided on the six-month extension of the discount for the aforementioned five islands, and handed out a social benefit to the residents of a string of other islands where the VAT will be raised as well.
Just a few days later, the government retroactively hiked the heating fuel subsidy for residents of mountainous and border regions: Grevena, Drama, Evros, Evritania, Ioannina, Kastoria, Kozani, Serres and Florina prefectures.
The IMF has signaled its consternation over the barrage of handouts, and it may issue a warning in its report to the Fund’s Executive Board, in February.
Property auctions delayed
Creditors have also expressed concerns over the delays in conducting property auctions, both on site at lower courts and online, which are resuming tomorrow after the holidays.
In Attica alone, 63 auctions at local, lower courts (eirinodikeia) are scheduled for tomorrow, and 26 auctions will be held online.
The government wants to push forward with online auctions for debts to the tax office and to insurance funds, based on the lower commercial value, and not the older tax valuations that were established before the economic crisis began in 2010.