Memorandum update reveals years of tough post-bailout measures

The ‘Supplemental Memorandum of Understanding” between the government and creditors that was posted on the European Commission’s website today includes provisions for several years of high primary surpluses and for thorough implementation of all measures agreed to over many years.

“Success requires ownership of the reform agenda by the Greek authorities. The government therefore stands ready to take any measures that may become appropriate for this purpose as circumstances change. The government commits to consult and agree with the European Commission, the European Central Bank and the International Monetary

Fund on all actions relevant for the achievement of the objectives of the Memorandum of Understanding before these are finalized and legally adopted,” the supplemental memorandum states.

The text leaves open the prospect of lowering the tax-free threshold to 5,700 euros earlier, in 2019, and it makes clear that existing commitments will be implemented at least through 2022.

Many of the 88 preconditions for concluding the fourth bailout review have been postponed due to time constraints, but some will be implemented by the end of the year and some later.

New civil service department directors must be appointed by October. The Elliniko development project’s economic agreement must be completed by the end of the year. The cadastre and forest maps must be completed by June, 2021, and a law must stipulate that Public Power Corporation electricity bill discounts for poorer households will not create fiscal problems.

The government commits itself to present a medium-term programme for the 2019-2022 period, which must include a spending ceiling in line with the 3.5 percent primary surplus target.

Pension cuts are still scheduled for January, 2019.

The text also says that the government will speed up the lowering of the tax-free threshold if the IMF and creditors deem that necessary, in order to meet the annual 3.5 percent primary surplus target in 2019.

A new agreement with lending institutions will be required for the implementation of the so-called counter-measures, which the government plans as a response to the austerity measures required by the programme.

Such measures must be financed only by super-surpluses, which are above and beyond the agreed upon medium-term targets.