Why Greece will be hitting the wall by the end of March - first , there still is no real commitment to rooting out the BIG tax evaders ( note the three month delay by Greelk prosecutors in getting the real Lagarde list from France - the one allegedly with 600 more names than the existing list ).... taxes revenues will disappoint , privatizations have and are unrealistic as far as the goals that have been set ...... meanwhile , austerity is going to cut jobs and pensions - who is kidding whom here ?

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_27/12/2012_476143

Credit sector losses seen at 46.8 bln

 Lenders will need a total of 40.5 billion euros for their recapitalization, says Bank of Greece By Yiannis Papadoyiannis
The combined losses of domestic banks due to bad loans in Greece and abroad add up to a staggering 46.8 billion euros, while the recapitalization needs of the local credit sector are estimated at over 40 billion, the Bank of Greece announced on Thursday.
The report on the recapitalization and restructuring of the Greek banking sector drawn up by the country’s central bank estimates the credit risk as defined by the BlackRock evaluation at 36.8 billion euros, while another 8.2 billion euros comprises losses from portfolios of loans abroad and 1.8 billion euros from loans to companies related to the Greek state. This 46.8 billion along with the 37.7 billion euros from the debt restructuring (PSI) in March add up to losses of an unprecedented 84.5 billion euros, which amounts to 42 percent of the country’s gross domestic product.
Losses are offset to a great extent by provisions (30.5 billion euros) and the expected profits for the 2012-14 period (11.4 billion), but this is not enough to save shareholder capital. The crisis has wiped out the bank shareholders’ entire capital of 22.1 billion euros and, after factoring in the PSI and the credit risk, the net position of the Greek banking system is at -20 billion euros.
As a result, the lost capital will have to be replaced with new funds of 40.5 billion euros to bring the banks’ capital adequacy rate back to 9 percent by end-2014. In terms of assets, the four major banks (National, Alpha, Eurobank and Piraeus) were 8.1 billion euros in the red at the end of the year’s third quarter on a bank level and -4.5 billion on the group level. To cover the lost capital and align capital adequacy with BoG requirements, the four major lenders will require 27.5 billion euros.
BoG also estimates that besides the 40.5 billion euros, the recapitalization and sanitization of banks that have already been completed (concerning ATEbank, Proton, T-Bank, cooperative lenders and the sum of the funds that French parent companies paid for Emporiki and Geniki) had an impact of 1.4 billion euros. Another 3.1 billion will be required for the restructuring of smaller and cooperative banks.

The capital requirements may grow depending on the deterioration of the financial climate, BoG stresses, as well as the recent debt buyback, but could also go down depending on the participation of the private sector in the recapitalization process.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_26/12/2012_475962

Tax evasion scrutinized

 Prosecutors check new Lagarde list as troika calls for more effort to nab dodgers
Greece’s two financial prosecutors are expected to confirm by the end of the week whether the latest version of the so-called Lagarde list of Greeks who had deposits at the Geneva branch of HSBC is the same as the one they had been investigating over the last few weeks.
Grigoris Peponis and Spyros Mouzakitis were handed the new list after Finance Ministry officials traveled to Paris last Thursday to collect it from French authorities. Since October, the judicial officials have been probing a list of some 2,000 savers provided by PASOK leader Evangelos Venizelos.
The Socialist chief said he had the list on a memory stick from his time as finance minister. Venizelos, his predecessor Giorgos Papaconstantinou and two former heads of the Financial Crimes Squad (SDOE) have been questioned over the failure to investigate the list for possible tax evaders.
“The lists are being crosschecked name by name, amount by amount and if any differences are found, political and judicial responsibilities will be sought,” a source with knowledge of the prosecutors’ work told Kathimerini.
SYRIZA asked the government to explain why it took three months to obtain a new copy from Paris. Leftist MP Nadia Valavani referred to unconfirmed media reports that the latest version of the list had about 600 more names than the one prosecutors were given in October.
The issue of tax evasion has gained even more prominence after a troika report this week indicated that Greece was slipping far behind its targets for tackling dodgers. It said that only 567 out of a planned 1,300 checks on wealthy suspected tax evaders had been carried out by the end of September, bringing in 29 million euros, and that 1.1 billion euros of overdue taxes had been collected, rather than 2 billion.
The troika report says that only about 20 percent of some 53 billion euros owed by firms and individuals is realistically collectible. Greece’s lenders propose that the government change the law so it has the power to immediately draw money from the accounts of tax evaders.

The government has also been urged to hire 100 more inspectors to check wealthy suspected tax dodgers, with the focus being on those who owe between 300,000 and 1 million euros. This group owed a total of 3.1 billion euros. and...... http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_26/12/2012_475963 Power rate hike may be put off  Gov't asks country’s creditors for extension to deadline for liberalization of electricity billing By Chryssa Liaggou The government has asked the country’s creditors for an extension to the deadline for the liberalization of electricity rates, according to sources, as it realizes it will be impossible for consumers to cope with the rate increase that Public Power Corporation (PPC) has applied for, even with the reduced hike that the Regulatory Authority for Energy (RAE) has proposed. The government’s main argument in its request is many consumers’ inability to pay their electricity bills even at the existing rates. This is based on the fact that PPC has seen its rate of bad loans grow by 140.3 percent to 134 million euros in the first nine months of 2012 from the same period in 2011, a figure which is expected to increase further. An additional argument is domestic consumers’ unpaid debts to PPC, which amount to 700 million euros, combined with supply cuts that according to PPC data have reached up 30,000 per month. The agreement that Athens has signed with its creditors – the European Union, the European Central Bank and the International Monetary Fund – provides for the low-voltage rate to fully reflect the cost of electricity production by July 2013. The government is also permitted to impose the rate hike in three installments: in January, March and May. The Energy Ministry, which has the responsibility of fulfilling this commitment, has realized that the original plan to reduce the first installment of the hike to the lowest possible level would only offer consumers short-term relief, as in the next five months a major increase would become inevitable. Therefore the target for a small increase in January has been abandoned and replaced by a request for an extension to the deadline for harmonization with the relevant EU directive and the agreement with the country’s creditors for the liberalization of rates for at least one year. Such a move would render the transition from regulated rates to cost-benefit rates smoother for consumers and secure an adequate cash inflow for PPC. RAE has proposed an average increase of 13 percent for the year’s first half, compared with the 25 percent PPC had asked for. The ministry must decide by December 31. and...... http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_26/12/2012_475967 Huge task for privatization fund by March By Vangelis Mandravelis The state privatizations fund (TAIPED) will have to start one sell-off project per week from the start of the new year, as the new agreement signed by the government and its creditors provides for 10 privatization projects to begin within the first quarter of 2013, a particularly demanding target for the fund and the government alike. If one adds the privatization of the Astir Palace Hotel in Vouliagmeni, handled by the National Bank of Greece, to those projects, the total number comes to 11 for the next three months. However, the assets for utilization also include 40 real estate properties that can in no way be deemed as a single sell-off project. The plan is for the the procedures to start for the selling of the following companies: Organization of Hellenic Horse Racing (ODIE), Hellenic Post (ELTA), Hellenic Vehicle Industry (ELVO), Thessaloniki Water Company (EYATH), Larco mining and metallurgical company, and Hellenic Defense Systems (EAS). The government will also have to implement the concession of Egnatia Odos, small ports and marinas, and regional airports in the first quarter of 2013. http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_26/12/2012_475965 State has gone over the limit with tax on alcoholic drinks By Dimitra Manifava The increase in taxation on alcoholic drinks has failed to achieve the government’s desired objective, with state revenues declining to levels last seen in 2009 – before the upward adjustment of value-added tax and the special consumption tax on alcoholic beverages (SCTAB) – as a result of the slump in consumption. Furthermore, companies in the sector have seen their turnover shrink drastically, as consumption has plummeted 50 percent compared to 2009, due in part to the major increase in the illegal trade of alcoholic drinks. According to data recently released by the Finance Ministry, in the first half of the year state revenues from the SCTAB amounted to 137.1 million euros, almost the same as in the first half of 2009, when revenues from the special consumption tax had come to 133.8 million euros. Notably, the special consumption tax on alcoholic beverages has increased from 2009 to date by a staggering 125 percent. The latest available data from the Hellenic Association of Drinks Distributors (ENEAP) paint a similar picture: In the period from January to October 2012, state revenues from the receipt of SCTAB and VAT added up to 224.6 million euros, well below the 2009 level. In the same period in 2011 they had come to 290.7 million, in 2010 to 307.1 million and in 2009 to 258.8 million euros. In other words, the increase in taxation on alcoholic drinks only managed to attain its target – i.e. to see more revenues enter state coffers – up until the end of 2011. The deepening recession and the fact that taxes remain particularly high (as VAT and SCTAB account for 57 percent of the retail price of popular alcoholic drinks) have resulted in a decline in alcoholic beverage consumption from 10.76 million hectoliters in the first six months of 2009 to just 5.6 million hectoliters in the first half of this year. Besides the reduction in revenues for the state, the drop in consumption, which is attributed to a great extent to the increase in taxes, has resulted in the loss of some 10,000 jobs in the sector in 2010 alone and a reduction in the sector’s added value to the tune of 387 million euros in the same year.