Politically sensitive measures around the tax and the labour market reforms are preventing the Greek second review from conclusion, an EU official said on Tuesday.

The talks are virtually stuck over which year the 1.8 billion euros pension cuts will come into effect and whether collective bargaining will be reinstated at the end of the bailout program, according to a source with knowledge of the talks. It is understood that the Greek government has maintained that cuts should start in 2020, while the insitutions insist on a 2019 date.

The Syriza-led Greek government is facing fierce resistence from several MPs and central committee member in accepting measures that would minimize, if not annihilate, left-wing party’s chances at 2019 parliamentary elections. Party hardliners say that if pension cuts are imposed on January 2019, Syriza would face a debacle at the elections.

Greek PM and Syriza leader Alexis Tsipras has been reluctant to accept the creditors’ demands despite the uncertainty that is already taking a toll on the real economy. Greek manufacturing PMI took another dive in February as Markit Economics data suggested on Monday, while state arrears have increased by more than 500 million euros in February, Greece’s General Accounting office data show.

Greece faces a roughly 1.8 billion euros bond payment on April 20 and state’s ministries & utilities have recieved instructions from the government to hold back any unnecessary payments until further notice. Finance Ministry officials stress out that there will be no problem with the April 20 payments, since the Greek state maintains a more than 10 billion euros cash buffer but acknowledge that prolongueing the uncertainty over the second review conclusion is affecting state revenue.

Greek ministers return to Brussels

Finance Minister Tsakalotos, Labour Minister Achtsiòglou and Alternate Finance Minister Houliàrakis are back in Brussels in a new effort to reach a preliminary agreement by Friday’s Eurogroup meeting that would enable the return of the institutions’ staff back to Athens next week and the conclusion of a staff-level agreement before Easter holiday and IMF Spring Meetings.

Greek ministers’ return to Brussels ‘could be an important stepping stone, but no magic involved’, the EU official said.

Photo by Theophilos Papadopoulos/Flickr

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