Greece’s Creditors OK Delayed Cuts

Eurozone chief Jeroen Dijsselbloem. (AP Photo/Thierry Monasse)

ATHENS – Greece’s international creditors want the squeezed government to pass more austerity measures that would be implemented only if needed.

The Quartet of the European Union-International Monetary Fund-European Central Bank-European Stability Mechanism (EU-IMF-ECB-ESM) have delayed monies since July 2015 of a third rescue package of 86 billion euros ($98 billion) until more harsh conditions are passed, putting pressure on Prime Minister and Radical Left SYRIZA leader Alexis Tsipras.

The idea of a contingency package appears to end a long dispute between the Eurozone and IMF over whether Greece’s current reforms are enough, Reuters reported.

“We came to the conclusion that the policy package should include a contingent package of additional measures that would be implemented only if necessary to reach the primary surplus target for 2018,”Eurozone chief Jeroen Dijsselbloem told a news conference in Amsterdam after the ministers met.

The contingency measures needed to be “credible, legislated up-front, automatic and based on objective factors,” he said, without explaining what would trigger them although Greece’s current economic climate continues to be unfavorable and in need of shoring up.

Greek Finance Minister Euclid Tsakalotos said Athens could not legislate “contingent measures” as Greek law did not allow it. But Dijsselbloem said a way would be found.

“We need to work on how that mechanism is going to look like. Of course if there are legal constraints we can’t and won’t break legal constraints. We will design it in a way that delivers credibility …and (is) legally possible,” Dijsselbloem told a news conference.

The current reforms include a pension and income tax reform, the setting up of a privatization fund and a scheme to deal with bad loans. The content of the contingency set is not decided yet.