Greek FinMin again says high ‘fiscal space’ precludes implementation of pension cuts, lower tax-free income threshold

26 September 2018
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Greek Finance Minister Euclid Tsakalotos on Wednesday continued to insist that already legislated austerity measures – another round of pension cuts in 2019 and a lowering of the tax-free annual income threshold in 2020 – are not necessary, echoing the standing position of the leftist-rightist coalition government that enough “fiscal space” will be achieved in coming years.

Tsakalotos reiterated the poll-trailing Tsipras government’s position that already ambitious primary budget surplus targets (3.5 percent of annual GDP) will not only be achieved, but exceeded.

In reply, the political opposition has charged that fiscal targets are being met through increasingly high taxes and failure by the Greek state to cover arrears to the private sector, concerns that are reportedly shared by some institutional creditors and market analysts.

Tsakalotos also promised that archaeological sites and hospitals in Greece will not be transferred to a “super fund” created under previous memorandum bailouts, while he said countervailing measures, which accompany the 2019 and 2020 austerity measures, will also be implemented.

In taking yet another swipe at the IMF, considered by the coalition government as the strictest and most “neo-liberal” of the one-time “troika” or “quartet” of creditors, Tsakalotos maintained that “until July 2018 it (Fund) said the primary budget surplus was at 1.4 percent, now it says it is 3.5 percent. That’s why we’re in another world; and we’re out of the memorandums, and we have fiscal space so that we don’t need to reduce pensions and not apply the lower tax-free threshold, as well as to present the biggest portion of the countervailing measures,” he said from Parliament’s podium.

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