23 February 2012

FT: Athens told to change spending and taxes

European creditor countries are demanding 38 specific changes in Greek tax, spending and wage policies by the end of this month, and have laid out extra reforms that amount to micro-managing the country's government for two years.

The reforms are the price that Greece has agreed to pay to obtain a €130 billion second bailout and avoid a sovereign default that the government feared would throw Greek society into turmoil.

The 38 measures are a mix of laws that must be passed by parliament, ministerial decisions and presidential decrees that affect a complete cross-section of Greek economic activity, from health spending to municipal administration to tax collection. Only a handful of the measures are listed as passed or in the process of being implemented, including a highly-publicised €300 million in pension reductions and €325 million in other spending cuts. The other reforms are grouped under six categories, though most of the changes fall under spending cuts, bank regulations, and economic reforms.

Among the measures that must be completed in the next seven days are reducing state spending on pharmaceuticals by €1.1 billion; completing 75 full-scale audits and 225 value added tax audits of large taxpayers; and liberalising professions such as beauty salons, tour guides and diet centres.

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