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Greece passes electricity market reform, sets sovereign wealth fund

Euro & Finance

Greece passes electricity market reform, sets sovereign wealth fund

The reforms may unlock over €2 billion in loans.

[Juan Verni/Flickr]

Greek lawmakers yesterday (27 September) passed reforms sought by the country’s creditors to cut pension spending and expedite privatisations in exchange for financial aid under the country’s latest international bailout.

Signalling the conclusion of a first review of bailout terms, parliament voted to reform the country’s electricity market and transfer state assets into an umbrella sovereign wealth fund.

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The reforms were passed by a majority vote in the 300-seat parliament by members of Prime Minister Alexis Tsipras’ leftist-led government.

Passage of the reforms may unlock €2.8 billion of loans when deputy euro zone finance ministers meet this week.

Greece signed up to an international bailout worth up to €86 billion in mid-2015, its third financial lifeline from lenders since 2010.

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Greece’s public sector union (ADEDY) opposed the transfer of assets into the fund, saying it opens the way for the fire-sale of strategic state-controlled companies to private investors.

“Health, education, electricity and water are not commodities. They belong to the people,” the union said in a statement.

Workers at the country’s listed water utilities in Athens and Thessaloniki also walked out on Tuesday to protest at the transfers of the government’s stakes to the new fund.

Government officials say the transfer – grouping privatisation agency TAIPED, bank stability fund HFSF, state real estate and some state entities under a holding company – did not constitute plans for a sell-off, but more effective management.

“Transferring (the assets) to the fund does not mean the state forfeits its property. Secondly, it does not mean privatisation, and thirdly, these assets are not collateral for the loans of the country,” Energy Minister Panos Skourletis told a parliamentary debate earlier.

Representatives from the country’s lenders – the European Commission, European Central Bank, European Stability Mechanism and the International Monetary Fund – are expected in Athens mid-October, to start a second bailout review which includes unpopular labour reforms.

Greece hopes to wrap up that review quickly and qualify for participation in the European Central Bank’s quantitative easing programme early next year.

But government officials, echoing Tsipras’ pre-election pledges, have said that Athens is not willing to implement reforms that could lead to job losses and further wage cuts