Government mulling difficult compromise

3 February 2017
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The government is keeping its cards close to its chest over the steps it will take until Monday, when the International Monetary Fund publicizes its report on the sustainability of Greece’s debt.

Despite the fact that negotiations with creditors have picked up again on all levels, Greece’s economic team is reportedly waiting for the IMF report, and the reaction to it by the European institutions, to act accordingly.

At the same time, the government is also banking on the political dimension of the negotiations, beginning with the meetings Prime Minister Alexis Tsipras will hold Friday on the sidelines of the informal European Union summit in Malta.

According to reports, the government is working on a package of compromise measures on the condition that the IMF backs down from its demand for measures worth 4.6 billion euros. This could be a likely scenario given that the fiscal targets of 2016 were surpassed.

Sources say the government in return – and on the further condition that the creditors do not insist on drastic changes to labor law – would consider legislating now some of the measures that it is being asked to implement. These include reducing the tax threshold for incomes in 2018.

Under this scheme, the other demands made by creditors, such as pension cuts, would pass on to the automatic fiscal mechanism known as the “cutter,” which will be activated if Greece fails to meets its fiscal targets.

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