Greek Prime Minister and Radical Left SYRIZA leader Alexis Tsipras’ hopes of backing off more pension cuts he agreed with international creditors to impose starting Jan. 1, 2019 took a hit when the International Monetary Fund (IMF) said it won’t be allowed.
The Washington, D.C.-based agency took part in two first bailouts of 240 billion euros ($280.36 billion) with the European Union and European Central Bank to make up the Troika of lenders that started providing loans in 2010 to prop up a Greek economy undermined by generations of wild overspending and runaway patronage.
The IMF didn’t join a third, for 86 billion euros ($100.46 billion) that Tsipras sought and accepted in the summer of 2015, that came with more harsh measures he swore he would reject but agreed to implement.
But with his popularity plummeting, he’s said to be trying to figure out some way to get out of starting the new pension cuts he said were a Red Line he would never step over but jumped over.
The IMF has insisted he has no choice but to go ahead with the cuts, said Kathimerini, putting the agency at odds with the EU and ECB and the European Stability Mechanism (ESM) that took part in the third rescue package.
The European Commission’s envoy to Greece, Declan Costello, is working on a compromise that would be acceptable to the government, the paper said although it wasn’t clear if that could be done before the Sept. 8 Thessaloniki International Fair (TIF) where Tsipras reportedly planned to announce handouts and measures to negate the pension cuts.
While the IMF hasn’t declared its position the agency reportedly is sticking to its guns about the cuts because of Greece’s rapidly aging population putting more pressure on a social security system where not enough workers are paying in and many businesses duck making required contributions.
The IMF’s unofficial position, it seems, is that fiscal savings worth 1 percent of Gross Domestic Product (GDP) – the value of the planned pension cuts – are not required for Greece to achieve a primary surplus of 3.5 percent but believes they are necessary.
Tsipras is said to be so eager to wiggle out of the pension cuts he’s even willing to give up planned tax cuts and handouts to come from next year’s primary surplus, which could amount to 900 million euros ($1.051 billion,) according to current estimates.