As time constraints remain an issue the Greek government is ready to implement measures so an agreement can be reached with Greece's creditors within the next days and an overall agreement until the end of May.
The Greek prime minister, Alexis Tsipras, said his government was “very close” to reaching a vital deal with lenders, but excluded the possibility of giving in to key demands including further cuts to primary pensions and wages.
“It appears that we have reached common ground with the institutions on a number of issues, and that makes us optimistic that we are really very close to an agreement,” Tsipras said, noting convergence on harmonized sales tax rates and tax administration reforms.
Tsipras reportedly plans to press fellow European leaders including Angela Merkel, François Hollande and Jean-Claude Juncker about the bailout deadlock on the sidelines of a summit in Riga, Latvia next week, a meeting mainly designed to discuss eastern Europe. The Greek government expects to reach a deal by the end of the month and wants to convene a meeting of finance ministers to consider an aid disbursement.
Meanwhile disagreement is surfacing among government officials over how to proceed in the aftermath of the Eurogroup. During a five hour cabinet meeting on Thursday evening Deputy Prime Minister Yannis Dragasakis gave fellow cabinet members a verbal briefing on the broad outline of the development of the negotiations with Greece's creditors. His briefing failed to satisfy some of his colleagues and the ensuing discussion between ministers ended with “some concerns raised in a forthright fashion”, according to a source.
Senior government ministers believe that the government breaks its election pledges and do not exclude the possibility for a referendum to be called in Greece. As the row between government officials over measures to be implemented remains unresolved Greece and it's creditors appear to have converged on the growth forecast for this year, with both sides predicting the economy will expand by 0.5 percent according to Greek newspaper Kathimerini.
On fiscal targets, there also appears to be a meeting of minds. The primary surplus target for this year is expected to be between 1 and 1.5 percent, rising to 1.5 to 2 percent next year and to 3.5 percent from 2017 Kathimerini has reported.
A broad agreement has been reached on the need for tax reform with the Greek government examining the potential continuation of the single property tax (ENFIA) and the introduction of new rates for the VAT. The top rate is set to be between 18% and 20%, while the lower rate between 8% and 9%. The government is also considering leaving in place the solidarity tax on incomes above €30,000 without the 30% reduction that the previous coalition had introduced while other taxes may also be introduced.
On pensions, the government is proposing the elimination of early retirement benefits and the scrapping of early pensions as an alternative to introducing the “zero deficit” rule, which would mean stopping public subsidies to pension funds.