Athens Digest 01.02.2018

• Tsakalotos says Cash buffer good for “well over a year”

• Smiles at T-Bill sale ahead of market test

• Coalition mulls working separation but divorce ruled out

• Gorna means Upper: New proposal on the table in Macedonia talks

• New law is hurting patients’ access to drugs, says Drugmakers’ leading association

# Leftover bailout money and a new cash buffer would cover Greece’s needs “for well over a year” if necessary, said Euclid Tsakalotos. The Greek finance minister told Reuters in an interview that the country would not seek a precautionary credit line after the bailout ends in August. The government, he said, would soon start debt relief negotiations with lenders, based on a French proposal to link growth to the the country’s repayment burden.
The results of eurozone bank stress tests, he said, will be key in assessing efforts to deal with mountain of non-performing loans. The test results are expected in May.
Yesterday, the European Banking Authority released the macroeconomic scenarios for the stress tests. According to the baseline scenario, the Greek GDP will increase by 2.4 percent in 2018, 2.5 in 2019 and 2.4 in 2020. The adverse scenario includes GDP reduction by 1.3 percent in 2018, 2.1 in 2019 and return to growth in 2020 (+0.2 percent). Banking sources appeared confident about the results of the tests late yesterday night in Athens.

# Ahead of an expected bond market test in early February, borrowing rates are in steady decline. Greece raised 812.5 million euros from an auction of 26-week treasury bills yesterday at a rate of just 1.13 percent, the Public Debt Management Agency said. The previous auction on January 3 was at 1.65 percent, continuing a decline from a high of 4.96 percent in mid-June.
Despite losing market access in 2010, Greece has held regular T-Bill auctions, seen by officials in Athens as a small but important link with markets ahead of attempts to make a full return this year.

# The government aims to deliver a robust recovery before the scheduled 2019 general election, but consumers remain wary. Figures published yesterday by the Greek Statistics Agency Elstat showed retail sales fell by 1.7 percent on the year in November. The corresponding indicator for food sales fell by 7.3 percent.

# A United Nations envoy continues talks in Skopje today on a possible Macedonia name resolution, amid reports of a proposal from Greece.
Multiple reports in Greek news media, including state-run outlets, said the name ‘Gorna Makedonija’, meaning Upper Macedonia, has been suggested in Athens on Tuesday, during meetings with envoy Matthew Nimetz. The proposal was leaked despite repeated complaints in Skopje that proposals should remain secret until a solution is reached.

# A senior member of the Independent Greeks party (ANEL) says the party members could pull out of the cabinet over the FYROM name issue but continue to support the governing coalition. Panagiotis Sgouridis, a former deputy speaker of parliament and senior official in the junior coalition party, made the suggestion in a radio interview.
“It’s one thing to support the government and another thing to participate in it,” he said. Analysts refer to different scenarios about Syriza-ANEL cooperation; none of them affects the parliamentary vote of confidence to the government, tough.
Defence Minister Panos Kammenos, the Independent Greeks leader, reiterated his position this week against a compromise with neighboring FYROM. His party has nine MPs, backing Syriza’s 145 deputies in the 300-member parliament.
Party members are expected to attend Sunday’s rally in Athens against a compromise on the Macedonia name issue, as the stakes surrounding the demonstration continue to rise.
Anarchist groups are planning to stage an anti-nationalist rally on the morning of the rally, while the neo-fascist Golden Dawn party will hold an additional march in central Athens late on Saturday.

# A leading drugmakers’ association says new tax rules are hurting patient access to new and also older drugs in Greece. The Pharma Innovation Forum (PIF) issued the warning the same day that the European Commission announced its proposals about Health Technology Assessment (HTA) and after the recent approval of the relevant law by the Greek parliament.
The association represents 23 International pharmaceutical companies which operate in Greece, holding a 60 percent share of the country’s market.

On our radar: Chipping away at capital controls
Greece’s capital controls are being eased again. Effective today, the monthly limit of cash wire transfers abroad through authorised institutions will increase from a total of EUR36 million to EUR38.95 million. The figure concerns net transfers (money sent abroad minus remittances).
Capital controls were introduced in June 2015 before a deal on Greece’s third bailout was reached. Last May, Finance Minister Tsakalotos has promised to scrap capital controls by the end of 2017.