Greek bailout agreement reached

Greece agree bailout deal

An agreement was finally reached last Monday for a €86B bailout deal for Greece, the terms of the new bailout included implementing by Wednesday 15th July to pass laws that:

• Implement VAT hikes.
• Cut pensions.
• Take steps to ensure the independence of Greece’s statistics office is maintained.
• Put measures in place to automatically slash spending if Greece fails to meet its targets on primary surpluses (revenue minus expenditure excluding debt servicing costs).

And by Wednesday 22nd July to:

• Overhaul its civil justice system.
• Implement the Bank Recovery and Resolution Directive (BRRD) to bring bank resolution laws in line with the rest of the EU.
• Market reforms with a clear timetable for implementation of all OECD recommendations, including Sunday trade, sales periods, pharmacy ownership, milk and bakeries, except over-the-counter pharmaceutical products, which will be implemented in a next step.
• Privatisation of the electricity transmission network operator (ADMIE), unless replacement measures can be found that have equivalent effect on competition.
• Labour market policies should be aligned with international and European best practices.
• Adopt the necessary steps to strengthen the financial sector.

Alexis Tsipras, Greece’s prime minster had also sought no more involvement from the IMF (international Monetary Fund) but the IMF have had to stay involved in order to monitor and finance them. Greek MPs will also have to stomach a move to sell off €50bn of Greek assets. Greek banks have now been able to open again but the withdrawal limit of €60 a day remains in place.

VAT Changes

As approved in parliament last week, the change to Greece’s VAT rates are among the first of the new austerity measures to be implemented. As of Monday 20th July the following VAT changes are now in place with many products and services jumping from 13% to 23%.

• Hotels accommodation rises from 6.5% to 13%
• Restaurants, cafes, coffee shops and catering services rise from 13% to 23%
• Food goods such as – milk, fruit, fish, meat, sugar, salt, coffee, cocoa, canned food and sweets rise from 13% to 23%
• Services such as – funeral parlours, taxis and tutorial schools rise from 13% to 23%

• Clothes, shoes, textiles and some household items rise to 23%
• Farm products, animal feed, seed and fertilizer rise to 23%

• A reduced low VAT remains on theater tickets, some medicines, and books from 6.5% to 6%
• The reduced rates on the remoter islands will not change until Autumn 2015 or early 2016
• Public transport fares are expected to rise in August 2015

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