Tyler Durden — Zero Hedge April 28, 2015
There was a brief bout of Greek risk-on euphoria following yesterday’s latest twist in the winding road to the Greek insolvency, in which the Greek finance minister Varoufakis became the latest sacrificial scapegoat to be “Nav Sarao-ed” to the angry gods of the Troika, and has been henceforth kicked out of any negotiations with the Greek “institution” creditors.
The core problem for Greece, however, remains: namely that it is still completely out of money, and as we learned yesterday, the local municipalities have mutinied, and told the government they would not hand over their cash to the central bank without their own conditions being met first, and certainly not before May 7 which may well be too late for Greece.
Which means that suddenly not only does Greece not have the nearly €1 billion in cash it will need to fund May payments to the IMF, but it is suddenly short by €400 million for wage and pension payments.
According to Bloomberg, the Greek government is €400 million short of the amount needed for payment of pensions and salaries this month, citing a Kathimerini report.
Surprisingly, this takes place even as Greece’s IKA, OGA pension funds have been informed by the government that amount needed for payment of pensions will be deposited today, while the Greece’s OAEE pension fund has said payment of pensions won’t be a problem.
In other words, someone is not telling the truth: either there is enough money or there isn’t. And if the latter case is valid, then either the government or the pensions are now openly lying to the population.
This news follows a late, three-hour interview with the Greek PM on Skai TV, in which Tsipras “voiced hope that bailout talks between the cash-strapped country and its international creditors are “very close” to an initial deal, and ruled out early elections if the dragging negotiations fail.”
The ever optimistic Greek leader said that he believes a first agreement can be struck by the end of next week, which can then be ratified by Greece’s European partners.
“I think that by May 9 we will have an agreement” that will allow release of some bailout funds, he said in a three-hour interview screened just before midnight Monday. How that is possible when Germany has repeated on many occasions that it would not consider a piece-meal deal is unclear, but perhaps things have indeed changed and all it took was a Varoufakis pink slip.
Tsipras said that if the government has to choose, “our priority is our responsibility towards society, it is (paying) pensions and salaries.”
Creditors are demanding further reforms and savings, and have encountered strong opposition from Tsipras’ government that was elected on promises to alleviate five years of income cuts and fiscal pain.
Tsipras ruled out early elections if the talks fail. But, while insisting he expects an agreement, he did not exclude holding a referendum on the matter.
“If I end up having an agreement that puts me outside the limits (of my mandate), I will have no other resort,” he said. “The people will decide — obviously without elections, I want to make that clear.”
What is also curious is that during the interview Tsipras once again pivoted strongly toward Russia saying that “Greece is key for the Russian gas pipeline”, adding that the Turkish Stream pipeline would lower Greek powr costs, and that Greece could get €3 billion for the gas pipeline deal.
Hopefully the Greek PM understands that he is merely antagonizing the EU every time he mentions the Kremlin: his final negotiating trump card.
So in an attempt to offset any “pent up” Troika anger, earlier today we also learned that the Greek government is planning to pass into law various measures that the creditors agree on, such as a single value-added tax rate abolishing all existing exemptions, according to Brussels officials. According to Kathimerini, “sources from the seat of the European Commission speak of a flat 18 percent VAT rate for all services and commodities with the exception of medicines, to come into force by the second half of the year. For now Athens categorically refutes such a scenario, noting that negotiations are still ongoing.”
Among the bevy of other measures which will be included in the bill are the following as laid out by Greek Naftemporiki and as summarized by Bloomberg:
- Measures to implement 20% tax on TV advertising
- Increase sales tax rate on luxury goods
- Strengthen tax dispute resolution mechanism to speed up closure of pending cases
- Improve online VAT payment model
- Improve monitoring of digital economy by tax authority
- Make tax code easier to bring criminal cases for large- scale evaders
- VAT lottery scheme to reward customers demanding receipts
- Charge fees for issuance of e-gaming licenses
- Auction licenses for TV station frequencies
- Strengthen independence of public revenue authority
The proposed legislation won’t include areas where Greece, creditors disagree, such as pension reform, creation of bad bank, new luxury hotel tax, streamlining VAT rates. Areas where Greece disagrees with creditors to be resolved within broader agreement in June. The legislation to be discussed at Cabinet on Thursday.
Will this be enough to appease the Troika who will hand over Greek just enough money so that Greece can make the next payment to the troika due in a few short days, will be revealed in a few days, but one person who will henceforth be watching from the sidelines will be the Greek (soon to be former?) finance minister Yanis Varoufakis, who may have been thrown under the bus but…
- TSIPRAS SAYS VAROUFAKIS IS A GREAT ASSET FOR GOVT, GREECE
One wonders, no pun intended, what this asset’s haircut is for ECB collateral purposes.