Athens Macedonian News Agency: News in English, 15-06-08

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From: The Athens News Agency at <http://www.ana.gr/>

CONTENTS

[01] Early elections have not crossed the government's mind, spokesman says

[02] There will be a political solution at the highest level, DIW's president Fratzscher says

[03] Greek gov't examines changes in VAT proposals‏

[01] Early elections have not crossed the government's mind, spokesman says

"The extension of the deal alone does not meet the Greek society's needs," he added.

The government has also raised the debt issue and has tabled a specific proposal to the institutions, he noted. Regarding the VAT on islands, he said that it is included in the government's proposals.

Asked what the government awaits from Wednesday's meeting of Prime Minister Alexis Tsipras, German Chancellor Angela Merkel and French President Francois Hollande, Sakellaridis expressed his hope that the efforts for a solution acceptable for the government and the institutions will prevail.

Sakellaridis also said that the government's allies are those who seek a solution, stability in the eurozone ... and recognize the right of a people to be able to define its policies within the agreements made.

He stressed that the recourse to the polls has not crossed the government's

[02] There will be a political solution at the highest level, DIW's president Fratzscher says

"The German government is keeping a close eye to what the institutions say, but eventually there will be a political decision. It is now time to find a solution. The challenge is so high that there should be a solution at top political level," Fratzscher said and added "Negotiations at technical level carry on for five months and now we need a political decision with content. The fact that Mr. Tsipras discusses with Mrs Merkel, Mr. Hollande and now with Mr. Juncker is both necessary and important."

Fratzscher is in favour of the growth clause in the repayment of the Greek debt. "Our proposal is to link the payment of the loans' interest rates with the growth of the Greek economy. If there is no growth, as is the case right now, Greece will not pay interest rates.

"I am neither a friend nor an opponent of Mr. Varoufakis. I am a friend of the good ideas that improve the situation and that is why I find the proposal correct because the Greek government assumes greater responsibility, the burden of Greece's debt alleviates and is ensured that at some point in the distant future, when Greece recovers then it will be able to service its debt and interest, while the Greek people will be able to afford the burden of debt. I think that this is a good compromise," he noted.

Moreover, he expressed the view that there will be a new haircut of the Greek debt. "Even if the issue of a haircut is considered a taboo at the moment in Europe and Germany, I am deeply convinced that there will be another cut. There is no alternative, if not immediately, probably later, when we find that the debt burden is simply too big. A part of the 240 billion euros was used to repay debt and interest rates. Yes, one can say that it did not remain in Greece ... I do not know the exact figures, but certainly more than half the debt has been paid to lenders.

He also estimated that the new government in Greece is an opportunity for a new start. Greece needs a political jolt, a political renewal. Nevertheless, I regret that it did not make good use of this chance ... the Greek government rightly argues that we must deal with social injustices, to see how people will ensure minimum living conditions. Its failure is that it has not given a clear message that it wants to renew the country economically and politically. I have not yet seen any concrete plan on how he wants to move the country forward ... The main problem in Greece is the management. A modern economy needs sound and efficient public services.

"This is the main problem in Greece and can't be solved in 2-3 years. It is an evolutionary process that takes years, if not decades, but has to start ... We have reached a point that Greece's economic damage is so large that it can hardly be reversed," he said.

Fratzscher said that "he is absolutely convinced that Grexit in all scenarios, even in that of internal default is absolutely the worst solution. This is the reason why I sound the alarm bell, because there are some who want to expel Greece from the euro. A Grexit is the worst solution for Greece, Germany and Europe. It is preferable for Greece to remain in the EU and the eurozone, because such reforms are difficult and are easier and better applicable into a community, which has the same objectives and democratic structures."

The full interview is available for subscribers at ANA-MPA website.

[03] Greek gov't examines changes in VAT proposals‏

Speaking to ANA-MPA, government officials said that these changes would not lead to revenues of 1.8 billion euros demanded by the creditors, or significantly surpassing the expected revenue result of the Greek proposal.

The Greek negotiating team is having second thoughts over the VAT regime on Greek islands and was not considering not to change a lower VAT rate regime for the islands as such a move could bring a heavy blow to the citizens of these regions and to Greek tourism. The Greek side also did not exclude minor changes in the VAT factors but with the 23 pct factor remaining unchanged. Under the Greek proposal submitted to the institutions, the government plans three VAT rates: 6.0 pct for medicines, books, theater tickets, 11.0 pct for newspapers, magazines, fresh food, electricity/water rates, hotels and restaurants and 23 pct for all the remaining categories. This proposal will lead to an increase in tax revenue by around 950 million euros.

The Greek government is rejecting creditors' proposal to include electricity energy to the 23 pct VAT rate (from 13 pct currently).

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