Athens Digest 14.11.2018

• Legal claims creating fiscal pressure, says budget office chief

• Report: Central bank scheme would see bad-loan buy up worth 42bn

• New Democracy seeks VAT extension for islands hit by migrant crisis

• Bombers target home of senior prosecutor

# A barrage of successful legal claims against bailout cuts could pose a risk to Greece’s post-bailout budget targets, the head of the Parliamentary Budget Office has warned. Frangiskos Koutentakis issued the warning while presenting office’s latest quarterly report, adding that the run up to the 2019 general election was also a source of fiscal strain. But he noted that none of the main parties in parliament questioned Greece’s firm commitment to the 3.5 percent primary surplus. He also said that according to the Q3 data the 2018 primary surplus will be close to 4.5 percent of the GDP.

# Greece’s central bank is working on a scheme to use banks’ deferred tax assets towards reducing non-performing loans, in plan to be announced later this month. Bloomberg reported that, under the proposed plan, a portion of tax requirements would be placed into a so-called special purpose vehicle, which would issue bonds used to finance the purchase of non-performing loans worth up to EUR 42 billion. Speaking in Geneva, central governor Yannis Stournaras stressed that dealing with bad loans (or non-performing exposures) remains the top priority. “The efficient management of NPEs is of utmost importance for banking sector stability, economic growth and social cohesion. As of June 2018, the NPE stock stood at EUR 88.6 billion, reduced by 6.1 percent since December 2017 and by 17.3 percent from its peak in March 2016… Despite the progress so far, we still have a long way to go.”

# New Democracy has tabled legislation to parliament seeking an another extension of concessionary VAT rates for five Greek islands hardest hit by the migrant crisis. The rate cuts on Lesvos, Samos, Chios, Leros, Kos are due to expire at the end of this year but the conservatives proposed a 12-month extension, arguing that the impact of migration and earthquakes affecting two of the islands meant the local economies were in urgent need more assistance. The island VAT issue remains sensitive with creditors, led by Germany, who have repeatedly pressed Athens to harmonize sales tax rates nationally.

# Police removed a crudely-made bomb placed outside the home of Supreme Court prosecutor Isidoros Doyiakos, following two warning calls to the news media. The bomb did not explode. Police said gunpowder packed into a plastic container was found in a storage box on the back of a motorcycle outside the apartment block where the prosecutor lives in an eastern suburb of Athens. There was no claimed of responsibility but suspicion fell on small far-left militant groups which have targeted the judiciary in the past in reprisal attacks for terrorism-related convictions.



On our Radar: Post-bailout strike
The civil servants umbrella union is staging a 24-strike today, demanding that the government reverse salary cuts, income contribution hikes for social security, and privatisation plans imposed during the bailout years. The strike is expected to be joined by lawyers’ associations and affect state-run schools, public hospitals, and other services.