Greece still has work ahead on pension reform

23 January 2016
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Greece still has some work to do to on its pension reform proposals to satisfy its lenders, Eurogroup chief Jeroen Dijsselbloem said on Friday as the government attempted to dampen criticism of its plan at home.

“They’ve put a serious pension reform on the table. It doesn’t add up yet,” Dijsselbloem told the Wall Street Journal on the sidelines of the World Economic Forum in Davos, Switzerland, on Friday.

The Dutch finance minister’s tone was in keeping with other European officials at Davos this week who have wanted to appear encouraging toward the Greek government, while also making it clear that there is still some distance to go before the first review of the current bailout can be concluded.

“I’m pretty sure that an agreement will be found, so that the first review could be successfully concluded,” said European Central Bank President Mario Draghi, who met on Friday with Greek Prime Minister Alexis Tsipras in Davos.

The ECB chief added that the Greek government had made “significant progress in making reforms in fiscal consolidation.”

Greek sources said the two men were in agreement that the first review should be completed as soon as possible. Draghi is said to have stressed the importance of Greece being able to hit its fiscal targets in 2018, conducting a comprehensive pension reform and managing nonperforming loans.

Back in Athens, Labor Minister Giorgos Katrougalos headed a panel of government officials who held a news conference to counter criticism of the pension reform suggestions currently being discussed with lenders. He said the coalition is being asked to guide Greece through a “perfect storm” as far as the country’s troubled pension system is concerned.

Katrougalos suggested the government may consider extending the length of time over which farmers’ social security contributions will increase. The current plan is for them to rise from 7 percent to 20 percent over the next three years.

He also attempted to play down the significance of the rise, saying that in 2017, when the rate will have risen to 14 percent, the average farmer will have to pay 129 euros more in social security contributions per year, while low-income earners will see their bill decrease by 38 euros per year.

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