first_img Facebook Twitter: @NeosKosmos Instagram Recapitalisation of banks“Valuable Greek assets will be transferred to an independent fund that will monetise the assets through privatisations and other means,” reads the official statement. To help decrease the country’s debt, banks will require recapitalisation which will partly be achieved through the creation of a new €50 billion fund. Despite Germany’s demands to base the fund in Luxembourg, at Prime Minisier Tsipras’ insistence it will be held in Greece. Some analysts have suggested the figure of €50 billion is an overvaluation of the intrastructure in questionCutting costs: public sector and pensionsThe agreement states that Greece must introduce “quasi-automatic spending cuts”, which in layman’s terms means that if the books are not balancing financially, the government should continue to make cuts until they do. This extends to the public sector – one of the highest employers in the country – which must cut spending, in addition to depoliticising the Greek administration. As part of the agreement Greece must also “improve long-term sustainability of the pension system”, a reoccurring issue in negotiations with creditors over the past five months. By reforming pensions alone the country could save 0.25 to 0.5 per cent of GDP in 2015, and one per cent in 2016. By 2025, retirement reforms will see everyone retired at age 67, though lenders are pushing for the process to be complete by 2022 and could potentially introduce costs for those looking to retire early.Tax reforms Tax reforms are also high on the agenda, and will be achieved through the streamlining of the current VAT system to increase revenue. This will see the top VAT rate of 23 per cent included on restaurant bills, while the tax discount of 30 per cent currently granted to Greek islands will be revoked. Greece has compromised claiming that the new laws would first be applied to popular tourist islands with the highest opportunity for revenue, followed by remote islands at a later date.Strengthening the financial sector and liberalising the economy Strengthening the financial sector is key to a stronger Greek economy, requiring them to take “decisive action on non-performing loans”. It has also been requested that they make “more ambitious product market reforms”, which could see Sunday trading hours brought in, and the opening up of closed professions. Eurozone leaders have also asked that Greece’s labour markets be liberalised and demand that Athens “undertake rigorous reviews and modernisation” of collective bargaining and industrial action.PrivatisationDespite the instance of lenders that Greek statistics office, ELSTAT be privatised, Greece was permitted continued ownership on the basis that “the full legal independence of ELSTAT” be safeguarded. However, the country will be required to privatise its energy transmission network operator (ADMIE).Debt restructuring, bridging finances and IMF support Although Greece still owes €240 billion to Brussels, the European Central Bank (ECB) and the International Monetary Fund (IMF), the country has been promised that there will be further opportunity to discuss restructuring its debts. For the bailout agreement to be implemented, Greece must meet its payments of more than €7 billion to the ECB over the next two months. To help cover the debt repayments and avoid the collapse of Greek banking institutions, bridging finances will be made available.Source: The Guardianlast_img