European lenders have made important progress in talks with Greece on tax and pension reforms that are part of a package of measures Athens must adopt to win new loans and debt relief, a European Commission spokesperson said on Sunday.
Inspectors from the European Commision, the European Central Bank and the International Monetary Fund assessing Greece’s progress on reforms left Athens on Sunday, taking a break for the Catholic Easter holidays.
“The mission has been productive. Significant progress has been made on the income tax reform,” the spokesperson said.
Greek Prime Minister Alexis Tsipras wants to wrap up the reform review quickly to clear the way for talks on debt relief, help restore confidence in the country’s economy and persuade the Greek people that their sacrifices over six years of austerity are paying off.
But the talks have dragged on for months due to disagreements over fiscal targets, pension cuts and tax reforms between Athens and its European Union and IMF lenders and among the EU and IMF institutions themselves.
The focus is on ways to cover an estimated fiscal gap of 3% of GDP by 2018.
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According to sources close to the talks EU lenders have been more lenient during the review than the IMF, which has said that Greece will need far bigger debt relief than euro zone partners have been prepared to envisage.
A meeting of euro zone finance ministers in April will be crucial for Greece, which is also dealing with a huge migrant crisis.
The government, which has a parliamentary majority of just three seats, has pledged to trim its pension budget by 1% of GDP this year. But it wants to avoid cutting pensions for the 12th time since 2010 to plug the estimated fiscal hole.
Greek government officials said that during the latest round of talks the IMF opposed key pension proposals, such as hiking social security contributions, and wants to lower a tax-exempt threshold for low-income earners. It has also turned down a plan giving tax evaders incentives to disclose hidden income, as part of efforts to boost tax revenues.