Athens Digest 28.02.2019

• Unhappy with delays, EU institutions spell out terms for Greek catch up

• Moscovici in Athens to discuss 10-day deadline for relief payout

• PM aides say late compromise reached with banks

• Labour Ministry officials: Debt settlement scheme for social security to go ahead

# Creditors, as expected, have told Greece that proposed new household insolvency rules are insufficient and that other key reforms are falling behind schedule. The pointed reminder was made in the second enhanced surveillance report of Greece. “We fully share the objective of the Greek authorities to protect more vulnerable households,” EC vice president Valdis Dombrovskis told financial website, but noted that objections over “a large number of design and technical details” in the proposals needed to be addressed to ensure that new protection rules would not be exploited by strategic defaulters.” Other delay headlines include: The sale of coal-fired power plants by the Public Power Corporation, unfinished administrative reforms, incomplete recruitment at the Independent Authority for Public Revenue, a motorway concession deal in northern Greece, and appointments in the bank rescue fund HFSF.

# Pierre Moscovici, the EU finance commissioner, is in Athens this morning to meet the prime minister as Greece faces a pressing deadline to qualify for debt relief worth nearly EUR 1 billion _ with a decision due at the March 11 Eurogroup meeting.

# Yesterday, the Commission also confirmed that the country’s economy, despite the recovery, remains under stress. Greece was listed as a country with excessive imbalances, along with Cyprus and Italy. The Country Report identified a number of major long-term challenges, including high unemployment and stubbornly low investment levels. “Potential growth remains low, burdened by the loss of physical and human capital due to the low investment rate and the emigration of skilled workers in the past decade,” it said. “Unfavourable demographic trends are expected to continue affecting Greece’s growth potential.”

# Meanwhile, senior government officials say they have reached an 11th hour deal with banks on a new property protection framework, hours after yesterday’s warning from the EU Commission that previous proposals had fallen short of their approval. News reports quoted the officials as saying the revised proposals would limit court involvement in a key part of the settlement process. Banks also won a nine-month test period for protected mortgage holders to make adjusted payments on time or lose their programme status. The current protection scheme expires tomorrow.

# Officials at the Labour Ministry say plans to introduce a debt settlement programme for social security funds will go ahead, despite concerns expressed by creditors. The officials were quoted by the state owned Athens News Agency. They said that the settlement programme allowing 120 installments for repayment would be put into effect after “various technical issues” are resolved. The remarks were made after the EU Commission noted in its surveillance report: “The government has informed the European institutions that they do not intend to proceed in the near future with revisions to installment schemes for tax debt and social security debt, as they need to undertake further technical analysis and reflection. It is important to avoid negative risks to public revenues and to safeguard the payment culture.”

On our Radar: Gunman denied leave
A panel of judges in central Greece has turned down furlough request by former terror group gunman Dimitris Koufodinas, arguing that the 61-year-old still poses a threat to public safety. The former November 17 armed group assassin is serving multiple life terms but has been granted six successive leaves despite protests from the families of his victims and the governments of Britain, Turkey, and the United States. Koufodinas was transferred from Athens to a low-security prison in the central city of Volos last year. Koufodinas blamed the decision on a “justice system that is class discriminatory and acts under orders.” The far-left November 17 group claimed responsibility for 23 killings and was active between 1975 and 2002.