Athens Digest 14.05.2018

• Final review gets underway in Athens this week

• Dombrovskis urges Athens to continue ‘healthy’ fiscal policies

• The Greek holistic growth plan should not Increase liabilities of the State, says Francesco Drudi, ECB Mission Chief

• Conservatives leader reiterates he is bound by budgetary targets but not by the government’s growth plan

• Allocation of pension cuts under discussion

• ‘Rubicon’ anarchist group targets home of Austrian Ambassador

# The fourth review of Greece’s current bailout begins today in Athens with meetings on a technical level. Mission chiefs will begin on Wednesday. This week is seen as crucial given that the mission’s technical team has reportedly expressed concerns to the government over the reforms process during a meeting last Friday. Greece must implement 88 prior actions to ensure a successful bailout program exit in August but has so far completed just five.

# Meanwhile, European Commission Vice President Valdis Dombrovskis has urged Athens to complete its bailout review on time and to continue implementing “healthy fiscal policies” in the post-program era. In an statement to Saturday’s issue of Ta Nea newspaper, he said Greece’s return to the markets is a “delicate exercise but absolutely feasible” on the condition that all sides act responsibly.

# “Actions which could increase the liabilities of the state should be avoided within the context of the holistic growth program”, says Francesco Drudi, ECB Mission Chief for Greece in an interview with Naftemporiki newspaper. The adds that “the waiver is a precondition for the inclusion of Greek government bonds in the QE, but the decision on whether to apply for a precautionary programme should therefore fully rest in the hands of the Greek authorities”.

# New Democracy leader Kyriakos Mitsotakis reiterated yesterday that he is not bound by the growth plan the government is currently negotiating with the country’s creditors. “I say this clearly that this plan does not bind me. I am bound by the budgetary targets, at least until I can renegotiate them,” the conservative leader said in an interview to yesterday’s To Vima newspaper. He went on to berate the government for drafting a plan “which they have not shown us and have sent to be rewritten by Brussels.” Ruling Syriza responded saying that it would be an “oxymoron if Mitsotakis were to be ‘bound’ by the government’s growth plan.”

# Deputy Minister for Social Security Tasos Petropoulos said yesterday that pension cuts will start on January 2019, as planned. More specifically, he told broadcaster Skai that 25% of insured people will not be affected, while another 25% will see a reduction ranging from 1% to 18%. A further 20% will see their pensions increase over a period of five years, he said. He admitted that pensions under EUR 1,000 will also be affected. “In October we will see the exact cuts in pensions […] and will improve them,” he said, adding that “we have seven months ahead.”

# Members of the ‘Rubicon’ anti-establishment group scattered flyers outside the Athens residence of the Austrian Ambassador Andrea Ikic-Böhm yesterday in protest at Vienna’s refugee policies. In a statement on an anti-establishment website, the group denounced the call by Austria for tighter border controls.

On Our Radar: PPC needs sustainable recovery plan
The McKinsey consulting group has, reportedly, warned in its five-year strategic plan for Greece’s Public Power Corporation (PPC) that it is not viable and that it must enact specific measures to become sustainable, according to yesterday’s Kathimerini newspaper. In its report, McKinsey painted a dire picture of PPC’s finances and stressed that it must increase operational profits by EUR 500m over the five-year period. The consulting group proposed, among other measures, a voluntary retirement plan for some 2,000 employees and increased pricing – via the gradual reduction of discounts to customers and hikes in specific customer categories.