ATHENS – Greek Prime Minister and Radical Left SYRIZA leader Alexis Tsipras’ rampage of handouts with elections coming will hurt a slowly recovering economy’s hopes of a comeback, an envy for one of the country’s international lenders said.
International Monetary Fund (IMF) mission chief for Greece Peter Dolman said benefits critics said are aimed at buying votes are the opposite of what the government should be doing as Tsipras tries to wiggle out of reforms and austerity measures he imposed.
The Washington, D.C.-based agency took part in two first bailouts of 240 billion euros ($269.53 billion) that began in 2010 but was replaced in a third for 86 billion euros ($96.58 billion) in 2015 by the European Stability Mechanism (ESM.)
The ESM joined the European Union and European Central Bank to make up the new Troika of creditors who will be monitoring the economy for years to make sure fiscal targets are met so that they can be insured of being repaid, along with international banks.
Tsipras’ handouts have also reportedly raised worries with the end of 326 billion euros ($366.12 billion) in three bailouts on Aug. 20, 2018 the government would revert to the same kind of wild overspending and runaway patronage that created the economic crisis.
Dolman told a conference of the Economic Chamber of Greece that the government should be expanding the tax base to generate some fiscal leeway to bolster investments, said Kathimerini, and that the handouts will shrink the tax base instead.
Tsipras implemented an avalanche of tax hikes and raised the corporate rate to 29 percent but falling in polls with elections coming this year has now moved to cut taxes and give handouts to pensioners brutalized repeatedly by cuts.
Dolman also criticized SYRIZA for a plan giving state debtors 10 years to repay while Taxation in Greece is very high, the IMF official conceded, adding that he would be in favor Zsolt Darvas, the head of Brussels-based Bruegel think-tank, told the same event there is a medium-term risk of a significant slowdown to Greece’s growth rate.
He said that would be because of failure to boost investment and with an aging population putting less into social security plans. He agreed with Dolman too few Greeks are taxed high enough and the tax base needs to be broadened.