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July 1, 2010

Pension reform plan heads for the courts

Brief from Kathimerini sums up the obvious:

"The government faced fresh opposition to its planned pension and labor reforms yesterday, from within its own ranks and beyond, as the Court of Audit said at least five provisions in the proposed changes violate the Constitution and several professional unions and associations said they were planning legal challenges against the changes.

The first appeals are expected to be made over the next few days by the Athens Bar Association (ABA), the civil servants’ union ADEDY and a union representing retired public servants, sources told Kathimerini. According to sources, there are fears that these suits could pave the way for similar challenges from other groups.

...The content of the controversial reforms – drafted on the basis of a memorandum co-signed by Greece and its international creditors – was the focus of vehement debate in Parliament yesterday. Prime Minister George Papandreou clashed with opposition leaders accusing his government of betraying the Greek public. Responding to charges of hypocrisy leveled against him by the leader of main opposition New Democracy, Antonis Samaras, Papandreou said, “You don’t want to erase the memorandum but your memories – of your responsibilities, your actions that have brought us to this deadlock.”

'Proposed changes violate the constitution,' this is an argument probably hinged upon a technical issue, but will none the less will look like a simple refusal to face reality to just about everyone else.


VAT goes to 23% - ouch

Feel the squeeze? Associated Press on the new VAT increases:

"Prices of consumer goods and services have risen overnight in Greece, as a new sales tax hike takes effect in an effort to boost government finances.

The center-left government imposed the increase in Value Added Tax, or VAT, from 21 to 23 percent. The increase took effect Thursday, prompting an immediate rise in gas prices and highway tolls.

It is the second VAT increase this year, following hike from 19 percent in March.

Trading associations say they will try to limit price increases despite the tax hike..”

It will be interesting, to say the least, how this will play out. Consumer spending is a big part of the Greek economy, and this will also be a tight pinch onto tourist organizers and charter groups.


New head of Greek statistical agency from IMF

Another big step toward restoring any confidence in Greek financial handling is the appointment of an independent head of the statistical agency (Read about Greek statistical agency ELSTAT and GSS here).

Wall Street Journal on the new man to head the greek statistical agency:

"The finance ministry said Wednesday that it has appointed an International Monetary Fund official to head up the country's statistics service to restore credibility to Greece's problematic public data.

In a statement, the ministry named Andreas Georgiou as chairman of the newly revamped agency. Prior to his appointment, Georgiou, a Greek national, was deputy head of the statistics department at the IMF.

According to a brief biography, he studied at Amherst College in the U.S. and has a doctorate from the University of Michigan.

Greece's newly-elected Socialist government shocked its European partners and financial markets by announcing soon after last October's elections that the country's budget deficit was more than twice the level forecast by the previous government.

...Previously, statistics chiefs have been political appointees who served at the discretion of the finance minister.”

Separating stats from external control of the finance minister should put into place a hedge against all of the manipulation of 'facts' in the past, such that each incoming government would release amended stats to counter the previous government claims about the state of the Greek economy.

More from moneynews.com

"The agency was widely discredited after the new government revealed last year that budget data had been falsified and sharply revised its budget deficit upward. The move was the first step in the country's slide to near-bankruptcy.

...The previous agency head quit shortly after Prime Minister George Papandreou's Socialists took over from the conservative government in October, and revealed that its predecessors had falsified budget data.

Greece shocked international markets and its European Union partners by then sharply revising its budget deficit estimate from 3.7 percent of gross domestic product in early 2009 to 12.7 percent. That figure was later raised to 13.6 percent of annual output. EU officials accused Greece of deliberately misreporting its data, while Economic and Monetary Affairs Commissioner Olli Rehn said last month that Athens "has cheated with its statistics for years and years."


THIS PAGE REVISED MARCH 9, 2011



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