Greece resists IMF demands for more pension cuts

3 March 2016
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Greece cannot accept demands by the International Monetary Fund, one of its international creditors, to cut pensions further to achieve a primary surplus target in two years, its finance minister said on Thursday.

Greece has proposed an overhaul of its pension system to make the system viable by increasing social security contributions. That plan has met strong opposition from farmers who blocked highways for weeks in protest, and other professional groups.

Finance Minister Euclid Tsakalotos said the IMF did not doubt that the pension reform plan was serious but was concerned that it would fall short of the savings needed.

“It (the IMF) thinks that the figures don’t add up for us to reach (a primary surplus) of 3.5 percent of GDP in 2018 and says that since you have cut down on everything else, where are you going to find (money) if you don’t lower pensions further?” Tsakalotos told parliament.
Pensions have been cut 11 times since Greece signed its first bailout in 2010 and Athens cannot lower them further, the minister said.

He said the economy last year had performed better than projected under the bailout deal signed up in August. “The average estimate when we were discussing was for GDP growth of -2 percent and now we know it will be between -0.4 and -0.7 percent,” said Tsakalotos.

The IMF is also pushing EU lenders — the European Central Bank, the European Stability Mechanism and the EU Commission — to offer Greece more generous debt relief to make its reform program more sustainable, he said.

Disagreement between IMF and EU lenders over additional reforms Greece must carry out to achieve its fiscal targets are delaying the first bailout review Athens desperately needs to open the way for debt relief talks.

Tsakalotos warned that the delay was having a political and economic cost and could hamper reforms aimed at bringing the Greek economy back on track.

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