BRUSSELS, July 9 Greece's inability or
unwillingness to collect taxes threatens to create a new
financing shortfall, its lenders said in a report seen by
Reuters that signals a new low in relations.
After months of relative calm, concerns over the bloc's
first bailout recipient as well as a teetering government in
Portugal have reignited the threat that the euro zone crisis may
Athens is far from financial independence and even as Greece
received a fresh lifeline from the European Union and the
International Monetary Fund on Monday, the report underscores
the sense of alarm over Greece's willingness to change.
If Greece's long-term funding looks no longer secured, there
is a risk the IMF may have to pull out of the rescue.
In private, European officials have struck an increasingly
damning tone on Athens in recent weeks, with some saying the
government was doing just the bare minimum and the country's
economic outlook was dimming.
The 47-page report, co-authored by the European Commission
and seen by Reuters on Tuesday, formed the basis of the lenders'
decision to give Greece fresh cash - on the condition it
delivers - but it also questions Athens' "willingness and
capacity" to collect taxes.
"The strengthening of the tax administration constitutes a
key pillar of the fiscal consolidation strategy," the report
said. "Failure to deliver the targeted improvement in collection
performance would imply the need to seek alternative measures to
close the emerging fiscal gap."
The report showed Athens could face a fiscal gap of up to
half a percent of gross domestic product (GDP) - 2 billion euros
($2.6 billion) - this year and next if it fails to deliver on
the reforms its backers demand in return for fresh bailout cash.
For 2015 it predicts a fiscal gap of more than 1-3/4 percent
of GDP and of over 2 percent in 2016.
"The fiscal outlook for 2013-14 remains subject to high
uncertainty," according to the report, marked as a draft and
dated July 2013. It noted tax collection is concentrated in the
second part of the year.
"After measures had been taken in May to avoid the emergence
of a fiscal gap for 2013 and 2014, the mission identified new
shortfalls that threatened the achievement of the fiscal
targets, going as far as half per cent of GDP in either year,"
according to the report. GDP was 194 billion euros in 2012.
The report said, however, authorities had identified
measures to address the issue and to reach the targets of a
primary balance - before debt servicing costs - in 2013 and a
primary surplus of 1.5 percent of GDP next year.
Completing those steps is the condition for the EU and IMF
to pay out.
They would deal with overspending by the health care fund
EOPYY through rationing healthcare and preventing misuse of
publicly funded services, according to the Commission paper.
An income tax reform - such as a solidarity surcharge on
income from interest and dividends as well as lower tax
deduction allowance for medical costs - would also lead to
moderate revenue. Other steps initially planned for 2014, such
as a luxury tax and higher court fees, would now start in 2013.
Protests against public sector layoffs have picked up,
reflecting stiff opposition to Greek Prime Minister Antonis
Samaras's coalition government and the reforms meant to
kickstart the economy.
The troika of international lenders gave Greece an extra
three months to put 12,500 public sector workers in a mobility
pool - giving them eight months to find work in a different
department or be fired - after missing a June deadline.
Greece's economy could shrink by as much as 5 percent this
year, Athens-based IOBE think tank said on Tuesday, revising
down its previous projection and offering a more pessimistic
forecast than the country's foreign lenders.
The lenders stuck to forecasts the economy would shrink 4.2
percent this year and 0.6 percent in 2014. It did not detail
revenue targets for privatisation.