Greece scrambling to compile reforms list

London

GREECE'S coalition government has been working frantically to compile a list of economic reforms in return for the four-month extension of the bailout from the European Union (EU), European Central Bank (ECB) and the International Monetary Fund (IMF). If the creditors agree to promises that the reforms will be activated, 7.2 billion euros (S$11.1 billion) will be loaned to Greece by Feb 28, to be used to pay police, teachers, other public servants and general state expenditure. Four months is a short time, but the Syriza and Independent Greeks coalition government also hope that the reforms will begin to pull the nation out of its economic quagmire.

The deadline for the list of the reforms is Monday evening and on Saturday Greek Premier Alexis Tsipras admitted on TV that the left-wing government had "won a battle, not the war" and that "the difficulties, the real difficulties . . . are ahead of us".

Indeed, Mr Tsipras has a political problem if he goes against election promises and gives in to continued austerity demands from Germany and several other creditor nations. Pressure, however, was intense as there has been a run on Greek banks with estimates that some 21 billion euros has been withdrawn since the beginning of the year. Moreover, Greece's government debt rose by 2.4 billion euros to 324.13 billion euros or 181 per cent of gross domestic product (GDP) at the end of the fourth quarter of 2014, according to the Greek Finance Ministry debt bulletin.

Despite this massive debt burden, Mr Tsipras promised in his Saturday TV broadcast that the "agreement with the Eurogroup cancels the commitments of the previous government for cuts to wages and pensions, for firings in the public sector, for VAT rises on food, medicine".

This promise contradicted the statement of Germany's Finance Minister Wolfgang Schaeuble: "Being in government is a date with reality, and reality is often not as nice as a dream."

Mr Schaeuble added that Germany would not agree to pay Greece if its promised reforms were unsatisfactory. Chancellor Angela Merkel, however, was more dovish.

To straddle demands from creditors, especially Germany, and hopes of a disenchanted struggling populace, Mr Tsipras had an intensive meeting with his inner cabinet of 10 ministers on Saturday. So far there has been no announcement of proposed measures, but from previous statements, reforms are expected to be in tandem with recommendations of the Organisation for Economic Co-operation and Development (OECD). These include pledges to improve collection of taxes and much tighter controls on tax evasion and corruption of civil servants and politicians. The OECD also recommended improved education, greater efficiencies in the civil service and a dramatic reduction in business red tape. The government should also confront vested business interests that are trying to prevent competition.

Sceptics wonder if a left-wing government will be able to reignite the private sector and thus cut the overall unemployment rate of 26 per cent and youth unemployment of 51 per cent of the working population. Greek industrial turnover plummeted by 8.9 per cent in December and Greece's current account of its balance of payments had a deficit in December, the third successive month, according to official figures.