Greece prepares reform bill, lenders seek concessions

Wed Apr 29, 2015 6:39pm EDT Related: WORLD, GREECE

ATHENS/BRUSSELS | BY RENEE MALTEZOU AND JAN STRUPCZEWSKI(Reuters) - Euro zone officials sought to wring policy concessions from Greece on Wednesday to unlock urgently needed aid after Athens said it would present a list of reforms for legislation to show it is serious about implementing its promises.

The draft bill was not expected to include major novelties beyond measures already discussed with EU and IMF lenders, but Athens is hoping it will speed up slow-moving talks and permit at least an initial deal to ease its searing cash crunch.

The reforms, including some privatizations and tax steps, were to be outlined to senior euro zone finance ministry officials in Brussels on Wednesday. They will be assessed in more detail when technical-level teams from Greece and the lenders meet on Thursday, Greek government officials said.

Despite lenders' scepticism, Greece's government is hoping an interim deal can be struck before a May 12 payment of 750 million euros to the IMF that Greek officials have suggested could be difficult to make without more aid.

However, a senior euro zone official involved in the talks said that to secure any deal, Greece would have to make a substantial concession on at least one of three disputed issues - pensions, labor market reform and taxation.

"We need to see a very significant policy move on the Greek side this week to recreate confidence the process," the official said, speaking on condition of anonymity.

"It could be pensions, it could be the labor market but ... they have to pay the political cost. The Eurogroup wants to see that political cost being paid."

The lenders have said a partial disbursement of frozen aid is not possible until Greece has presented and implemented a full list of reforms. Athens is hoping an initial deal will prompt the European Central Bank to loosen restrictions that prevent Greek banks from buying more Treasury bills.

"We are now aiming at a 'minimum', let's say, agreement in which we combine some things that we will agree to implement immediately with the relaxation of the ECB restrictions," Deputy Prime Minister Yannis Dragasakis told Sto Kokkino radio.

TIGHT LEASH

The ECB has kept Greek banks afloat but on a tight leash while talks with lenders continue. It raised the cap on emergency liquidity assistance available for Greek banks by 1.4 billion euros to 76.9 billion euros on Wednesday, a banking source told Reuters.

Figures published by the ECB showed that the Greek banks continued to leak deposits in March, but at a slower pace than in the first two months. The euro zone official said they were still well capitalized, but their fate hinged on the continued solvency of the Greek government.

The discussion with lenders on detailed legislation is meant to underline the government's serious intent, after the lenders accused Prime Minister Alexis Tsipras' government of dragging its feet and failing to produce results.

The euro zone official said it was vital that Greece discuss the legal texts with its partners before putting them to parliament and not just present a "take it or leave it" package, immediately leaked to the media, making negotiation impossible.

The proposals will include tax and public administration reforms, a tax on television broadcasting rights and on TV advertisements, a Greek official said. Tourists on popular Greek islands will be required to use a credit card for transactions of more than 70 euros in an effort to crack down on tax evasion.

The creditors have demanded that the rate of value added tax applied on those holiday islands be the same as on the mainland.

It was not immediately clear if the government planned to cede more ground on such issues in this week's talks.

One official said the government would try to break the deadlock on the labor market by pushing back its plan to raise the minimum wage, a move the lenders oppose.

Deputy Labour Minister Dimitris Stratoulis reiterated that Athens would not agree to demands for further pension cuts.

"Our government is making every possible effort right now to have a positive deal, which will respect our program, which will respect the main principle of our program since we took power, which is to put a brake on wage and pension cuts," he told Mega TV.

The draft bill is expected to be discussed at a cabinet meeting in Athens on Thursday, a finance ministry official said. Once approved, it would then be debated in parliament.

EU paymaster Germany, which has taken a hard line, said it expected talks would be speeded up now that Greece had reshuffled its negotiating team.

(Additional reporting by Deepa Babington, Angeliki Koutantou and Lefteris Papadimas in Athens; Writing by Paul Taylor)