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Greece-Lenders Still Disagree Despite VAT Hike and Internet Levy

tsakalotos-stathakis_0Greece and lenders did not come to a staff level agreement after a marathon conversation that ended early on Thursday morning to be continued later in the day.
In the talks that lasted 17 hours, the Greek side offered a value added tax increase from 23 to 24 percent and a new levy on internet usage, but lenders did not find the proposed measures sufficient to close the difference.
Differences still remain as Athens proposes the threshold for tax exempt incomes to be at 9,100 euros (it is currently 9,545 euros), but lenders insist on 8,182 euros. In addition, there is still a gap on proposed pension cuts and management of non performing loans.
Sources close to the talks say that is impossible for Finance Minister Euclid Tsakalotos to extract the desired agreement before Friday’s Eurogroup. The mission chiefs of Greece’s creditors will leave for tomorrow’s scheduled meeting of euro zone finance ministers in Amsterdam.
The European Commission allows for the possibility of an extraordinary meeting of euro zone finance ministers next week if the two negotiating teams reach a staff level agreement by then.
Greece’s lenders disagree with the government’s proposals on the new taxation system, the social security reforms and mainly the z”red loansZ” scheme, which make up most of the 5.4 billion euros for the primary surplus target to be achieved. They argue that the proposed measures cannot yield the desired revenues.
On security fund reforms, Athens proposes higher contributions, but lenders insist on deeper cuts in supplementary pensions. Regarding bad loans, Economy Minister Giorgos Stathakis tries to protect all non performing loans from sale to distress funds. Creditors, however, insist that the only NPLs that can be protected are mortgages of primary residences of those who have applied for protection through the Katselis bill.

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