Private online meetings with the Troika

The Finance ministry starts today, Monday, a 3-day bazaar for the measures it will have to implement until 2015, in view of their final announcement, probably even before April 15, possibly this Friday.

In fact, in a bid to “boost” the government for the next measures, and especially for minister Papakonstantinou, the President of the European Council, Herman Van Rompuy, is arriving in Athens on Tuesday. There might also be a visit by Trichet, perhaps within the week.  

The threefold mission of the government is:

* To save 22 billion by preparing the budgets for the next three years (2012-2014), which will be updated each year along with the memorandum.
* To rewrite the 2011 budget, in line with the revised deficit for 2010. Reportedly, the IMF will announce on Monday that its final estimate for the 2010 deficit in our country was at 10,4% of the GDP instead of 9,4%, as it had been estimated by the government. So, there is a hole of 2 billion which, in order to be covered, will require additional measures that will be finalized after the official announcement of the deficit in 2010 by Eurostat, in the next few days. And all of this is happening in a downturn period (-3% this year according to the IMF).
* To present the list of privatizations worth 15 billion by 2015, ie over the course of the memorandum and the mandate of this government.

By April 15, the Midterm Fiscal Policy Framework of 2012-2014 will have to be presented to the Cabinet and then tabled for a vote in parliament.

Thus, the cost of SOEs, for the consolidation of which the Troika is requesting a special memorandum, is going under the microscope. The Troika auditors seek further cuts in wages, benefits and overtime, and a lockdown of harmful SOEs.

Specifically, and based on information, the special memorandum for SOEs should include:

* labor cost reduction
* trimming of extra pay and benefits
* contract renegotiation of all staff
* cuts in redundant personnel
* implementation of the measure of one hiring for every ten layoffs
* shutdown of loss-making SOEs
* sale of shares and subsidiaries
* new invoice increases
* further cuts in funding at 30%

They detected increases in earnings

The Troika team that was in Athens on Wednesday said “no” to the horizontal cuts in SOE salaries, calling for a rationalization for those who got increases despite the cuts. The auditors found an increase in funds for extras such as bonuses, promotions, overtime, home and away work.

It should be noted that the Midterm Fiscal Policy Framework will include:

* conservative macroeconomic forecasts
* a basic scenario with projections of revenue and expenditure for the state and other government agencies
* a description of permanent financial interventions, timetables and quantification
* annual expenditure limits for each ministry and goals for other bodies
* financial projections for General Government after the interventions
* long term debt projections and
* sectoral plans in areas such as public enterprises, other public entities and special accounts, tax evasion, governmental wages, public administration, social and defense spending.

According to the Framework, 2/3 of 22 billion will come from expenditure cuts and 1/3 from revenue raising measures.

In 2011, the debt will be the highest in the European Union (153% of the GDP) and the Finance ministry describes this as “the great challenge of the coming years for its control and containment”. Under the Midterm Framework, debt reduction will be achieved through fiscal adjustment, growth, use of public property and the best lending terms, which will come as a result of all of the aforementioned factors.