Institutions come back and look for new measures to cover financial gap

The negotiation talks between the institutions and the Greek government do not seem to progress as it was supposed to be. Greece’s lenders will return to Athens to measure the gap in state budget and look for other measures, while the government is waiting to see farmers’ and institutions’ response on the social security reform and tax hikes.

The situation is yeasty especially after Finance Minister Euclid Tsakalotos’ message, who speaking in an interview asked the IMF to respect the ‘acquis communautaire’ and not to insist on further cuts, although Tsakalotos himself, as well as Poul Thomsen and Christine Lagarde, have claimed that “the numbers should add up”. This means that either new equivalent fiscal measures will be found, or the IMF could no longer participate in the Greek program in 2018.

Based on these data, the discussion between the institutions and the Greek government on pension and salary cuts will be done on a new basis. But, it will not be easy for the government to persuade the IMF that tax hikes and increases in contributions could be used as equivalents to salary cuts and layoffs without generating deficits in state expenditure.