Published June 18, 2012
Greece is on track to get a new coalition government composed of the two parties that broadly back its bailout from European partners and the IMF.
The conservative New Democracy, which will lead the coalition, and its expected minority partner, the Socialist PASOK party, have both said they want to renegotiate the bailout deal to soften its impact on the country's severe recession.
Below are the main points which Greece's new government will want to renegotiate with the so-called "troika" of the European Union, the International Monetary Fund and the European Central Bank.
Greece wants more time to implement fiscal cuts of 11.7 billion euros for 2013 and 2014, to soften their impact on a rapidly sinking economy.
New Democracy leader Antonis Samaras has said they should be spread out over four years through 2016. Socialist leader Evangelos Venizelos has said the country may be able to get until 2017 to implement them. Under the current bailout deal, Greece must push through the cuts to narrow its budget deficit to 2.1 percent of GDP in 2014 from 9.3 percent in 2011.
Samaras said he plans a 650 million euro spending package to bring the lowest pensions back to their 2009 levels and give benefits to farmers, law enforcement officials and families with multiple children hurt by cuts. Samaras has said he has identified new cuts worth that amount to offset that spending.
Samaras also wants to extend unemployment benefits to two years from one, possibly with the help of European Union funds. He also wants unemployment benefits to apply to the self-employed and shopowners forced to shut down their businesses.
New Democracy wants corporate taxes to be lowered next year to 15 percent from 20 percent at present. The party also wants a gradual reduction of the main value-added tax (VAT) rate to 19 percent from 23 percent over the next three years.
It wants to lower the top tax rate for individuals gradually to 32 percent from 45 percent and put a cap on households' total tax obligations as a percentage of income. The tax-free threshold for individuals would be gradually raised again in two years, to 10,000 euros from 5,000 euros at present.
The party hopes that speeding up economic growth would help make up revenue from lower tax rates.
Both New Democracy and PASOK want to strengthen collective labor agreements and bring back more protection for workers in a rapidly shrinking job market. The Socialists want EU labor law standards to apply to Greece. The conservatives want no further private sector wage cuts following those already enacted under the bailout agreement.
Both New Democracy and PASOK want to compensate Greek retail bondholders who had invested savings in Greek bonds and saw their value slashed by about 75 percent as part of the country's debt restructuring this year. Greece's lenders have warned against offering special treatment to a select group of bondholders.
PUBLIC SECTOR LAYOFFS
Under its bailout plan, Greece must reduce its public sector payroll by 150,000 people by 2015, mainly by hiring just one new employee for every 10 that retire. At least 15,000 civil servants are due to be fired after spending a year in a so-called "labor reserve" where they receive a basic, no-frills salary.
New Democracy wants civil servants in the reserve to receive a basic salary and social contribution payments for three years instead of one as foreseen in the plan.