June 24, 2015 / 4:04 PM / 4 years ago

Factbox: What creditors want from Greece for in exchange for financing

BRUSSELS (Reuters) - Greece and its international creditors are in the final phase of talks on a financing-for-reforms deal that would allow Athens to avoid defaulting on a payment to the International Monetary Fund on Tuesday.

Below is a list of the main requirements from the creditors for a deal to happen, based on a document published by the online edition of the Wall Street Journal.


Greece should adopt a supplementary budget law for the rest of this year and outline a medium-term fiscal strategy for 2016-18 that envisages a:

1 percent of gross domestic product primary budget surplus in 2015

2 percent of GDP surplus in 2016

3 percent of GDP surplus in 2017

3.5 percent of GDP surplus in 2018

There seems to be agreement on these targets between Athens and its creditors.


Greece should change its value-added tax system from July 1, 2015 to generate 1 percent of GDP higher revenues a year.

Greece is offering an increase in VAT of 0.38 pct/GDP in 2015 and 0.74 pct/GDP in 2016.

Creditors want the standard rate of VAT to be 23 percent, and agree to a reduced 13 percent rate for unprocessed food, energy, water and hotels, and a super-reduced rate of 6 percent for pharmaceuticals, books and theater. They want exemptions to be eliminated to broaden the tax base. The rates would apply equally on the mainland and on the Greek islands.

Greece wants to keep VAT exemptions on the islands.


Greece should:

- Require full advance payments of corporate income tax by the end of next year

- Raise the solidarity surcharge

- abolish subsidies for excise on diesel oil for farmers, and halve heating oil subsides in 2016 budget

- Adjust property tax rates if necessary to make sure it gets 2.65 billion euros in property tax in 2015 and 2016

- From July 1, cut the price of all non-patent drugs to 50 percent and all generic drugs to 32.5 percent of the patent price


Greece should:

- Cut military spending by 400 million euros, including through reductions in headcount and procurement. Greece wants to cut military spending in 2016 by only 200 million euros.

- Reform the income tax code to cover capital taxation, investment vehicles, farmers and the self-employed

- Raise the corporate tax rate to 28 percent from 26 percent

- Tax TV advertisements

- Launch an international public tender for TV licenses and usage fees for frequencies

- Extend the luxury tax on recreational vessels in excess of 10 meters, and raise the tax to 13 from 10 percent, coming into effect with the collection of income tax for 2014


- Implement in full the 2010 and 2012 pension reforms

- From July 1, phase in reforms to deliver estimated permanent savings of 0.25-0.5 pct/GDP in 2015 and 1 pct/GDP on a full year basis in 2016 through laws that:

* Create strong disincentives for early retirement, including through the adjustment of early retirement penalties, progressively adapting to the limit of statutory retirement age of 67 years or 62 and 40 years of contributions by 2022, applicable to all except arduous professions, and mothers with children with disability after June 30, 2015.

* Pass a law that would impose a penalty on withdrawals from the Social Insurance Fund for those affected by the higher retirement age equivalent to 10 pct on top of the current penalty of 6 percent.

* Integrate all supplementary pension funds into Greece’s Unified Supplementary Insurance Fund (ETEA) and make sure that all supplementary pension funds are only financed by own contributions from the start of 2015.

* Gradually phase out the solidarity grant (EKAS) for all pensioners by the end of 2017. Greece wants to keep the grant.

* Freeze monthly guaranteed contributory pension limits in nominal terms until 2021

* Provide those retiring after June 30, 2015 with the basic guaranteed contributory pensions only if they reach the 67 years retirement age.

* Raise the health contributions for pensioners to 6 percent from 4 percent on average and extend it to supplementary pensions.

* Phase out all state-financed exemptions and harmonize contributions rules for all pension funds with the structure of contributions to Social Insurance Institute, IKA, the largest Social Security Organisation in Greece, from July 1.

* Pass laws by Oct. 31, 2015 that would take effect from the start of 2016 to establish a closer link between pension contributions and benefits

— Broaden the contribution and pension base for all self-employed by switching from notional to actual income, revise all different systems of basic, guaranteed contributory pension components taking into account incentives to work and contribute

— Harmonize pension benefit rules of the agricultural fund (OGA) with the rest of the pension system in a pro-rata manner unless OGA is merged into other funds

— The consolidation of the social insurance funds will take place by the end of 2017 over two years. The process is to be activated this year by legislation to consolidate social insurance funds into a single entity, with operational consolidation done by end 2016.


- Reform the unified wage grid, effective from the start of 2016, with application across the public sector, decompressing wage distribution in both directions in connection with the skill, performance and responsibility of staff.

- Legislate a rationalization of specialized wage grids by end November 2015

Reporting by Jan Strupczewski; Editing by Catherine Evans

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