The Greek bailout is here, and we have the details:
The financial package makes available € 110 billion to help Greece meet its financing needs, with euro area Member States ready to contribute for their part € 80 billion, and the rest provided by the IMF. The first disbursements will be made available before the payment obligations of the Greek government fall due on 19 May.
Euro area financial support will be provided under strong policy conditionality, on the basis of a programme which has been negotiated with the Greek authorities by the Commission and the IMF, in liaison with the ECB.
The programme will include the following measures:
- Greece is subject to a check by IMF/EU each quarter;
- 5pc point reduction in fiscal deficit in 2010;
- Goal is to drive deficit down to 3% of GDP by end-2014;
- Debt-to-GDP ratio is forecast to grow from 115% to 140% (but these are the Maastricht numbers. Add some 10pc point to get the total debt);
- Individual measures include, another increase in VAT from 21 to 23% (plus increase for smaller VAT rates), 10% increase in excise taxes on fuel, cigarettes and drinks, a windfall tax, a property tax, near abolition of 13 and 14th month pay in the public sector, cut of Christmas and Easter bonuses, cuts in pensions, reducing early retirement.
The shortcomings of the plan according to Eurointelligence:
- No public sector layoffs, or change of status of public sector job;
- No complete removal of 13/14th month salary in public sector;
- No removal of 13/14th month salary in private sector, meaning more unemployment;
- No immediate privatisation of state companies;
- No change to rule that caps dismissals to 4% of workforce, and no change to firing costs;
- No anti tax-evasion mechanism.
I would also recommend reading an interview with one of my favourite philosophers, Jürgen Habermas, on the Greek bailout, the institutional challenges, and the German intransigence.