IMF Says Greece Pension Cuts Needed to Soothe Investors

Prime Minister and Radical Left SYRIZA leader Alexis Tsipras’ hopes of reversing more pension cuts he agreed to implement on Jan. 1, 2019 took a big hit when one of Greece’s creditors, the Washington, D.C.-based International Monetary Fund (IMF) objected.

The other lenders, the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) will take up the issue at a Eurozone meeting early in December with Tsipras arguing the cuts won’t be necessary because he believes fiscal targets will be hit without more reductions he once opposed.

Three bailouts of 326 billion euros ($383.67 billion) ended on Aug. 20, including the last, for 86 billion euros ($101.21 billion) Tsipras sought and accepted in the summer of 2015 after swearing he wouldn’t because it came with more brutal conditions he vowed to stop but then implemented.

With his popularity falling after reneging on anti-austerity promises, Tsipras is near-frantic to stop the pension cuts as well as first-time taxes on previously exempt low-and-moderate income families that will begin in 2020 he also agreed to impose but now wants to wiggle out of.

The IMF said that the pension cuts must begin as scheduled to “improve the country’s long-term prospects” and send a “clear signal” to investors that the government remains committed to agreed reforms.

Speaking at a regular press conference, IMF spokesperson Gerry Rice noted the cuts were part of reforms to which the government agreed last year and that Greece needs to show it is investor-friendly, without mentioning the agency and Troika insisted on an avalanche of tax hikes that took the corporate rate to 29 percent.