New Pension Cuts to be Expected After March



pension cuts

Troika has given a short cooling-off period to the Greek coalition government. This leaves the Greek government with only one choice. If the new measures do not bring the results hopes for, the government will have to take action in order to increase the State’s revenue. That means further cuts which will affect mostly the retirement pensions.

The budgets of the Funds show how difficult the situation is. The deficits in IKA’s Fund will probably approach the amount of 1.2 billion euros for the year 2014 and in OAEE’s Fund the amount of 800 million euros.

Those deficits are about to decrease by 2.1 billion euros, as Troika imposes. This leads to a dead-end in every level. The new measures taken by the Greek government are estimated to cover the gap but only up to some extent. Although, with the unemployment levels are getting higher and higher, an essential rise in the State’s revenue seems impossible. This dead-end can be avoided only by imposing new pension cuts.

In fact, the cuts in pensions will be the first “horizontal” measure that the government will be forced to take during the forthcoming year, despite what it is said right now.


14 COMMENTS

  1. Ha,good. Greece does not want to accept the Troika spending cuts,fine.Greece has to impose the SAME spending cuts without the Troika ANYWAY. Shortly and simply-without agreeing to the Troika conditions for further bailout,Greece does not have the cash to keep paying its current salaries and pensions.

  2. We have to look at things mathematically not just ethically and politically.

    While a primary surplus excludes interest on debt principle it still includes debt principal payments and doesn’t include some ancillary spending (which has to come from somewhere so it’s irresponsible leaving it out with accounting trickery). So primary surplus doesn’t say the whole picture.

    a. We first have to reach a situation where taxes collected matches new spending. This is not the same thing as a primary surplus. This is accounting 101. Inputs have to match expenditures if one wants to balance books.

    b. Once we have achieved the above, we then have to analyze how much old debt principle and debt principle interest we are capable of paying back on top of that To be ethical, this has to be done in a manner that’s as fair as possible to creditors. (imo given how much Greece has already suffered the fairest method is using other EU nations to derive an average figure)

    c. We then have to make more cuts, to match the final figure debt derived in step B. (as doing otherwise would be unfairly asking foreign creditors to perpetually subsidize us)

    Only of the requested amount is larger than the figure in step B would it requires a haircut (either in form of lower interest rate or reduction in principle). The bottom line is give or take a few billion here or there the B figure is the only amount we could ever have any hope of paying back.

    We seem near or finished point ‘a” but haven’t yet figured out a final debt figure that is both sustainable and fair to creditors (point b). This is why our debt continues to climb (as pre-interest principle and interest on principle both continue to add to it)

  3. Exactly. The international bailouts can’t and should not be a substitute for enforced tax collection in Greece .If Greece could collect all its taxes due,it would not need bailout in a first place.The problem is,the Greek political class is not willing to impose tax collection on its population ,both wealthy and middle class , which in my view is intentional enrichment of the Greek population at the expense of the foreign taxpayers. Instead they prefer to make up for lacking tax collection with foreign bailout money.Greece should stop demanding bailouts and start collecting its own taxes and live on what it can afford,bottom line.

  4. Tax collection is an important issue but its secondary one. The fundamental issue is balancing budgets. If we don’t collect enough taxes, we simply slash services even further.

    Greece hasn’t “demanded” bailouts. It botched its government finances by borrowing too much money, it was either going to receive more loans or straight default. The bailouts (85% of which is going to bail out foreign creditors rather than staying in Greece) is essentially a controlled default (without calling it a default). Now that the damage is done, the real question is what is a settlement that is as fair as possible to creditors but also gives Greece an opportunity to get back on its feet (as a perpetual debt prison is unethical. The punishment has to suit the crime)

    Your lectures on ethics aren’t very credibly when all you do here is say the same anti-greek rhetoric over and over again. From what I can tell you would be more than happy to see the genocide of Greeks.

  5. What may I ask does that have to do with the ordinary pensioner trying to exist of 500 a month or less why are they to blame ,should we just throw them on the street you XA moron

  6. Why …I say F### them what are they going to do kick us out …
    I doubt it they cant afford to kick us out the quicker they except this fact the quicker we will get real assistance

  7. Cuts should be made to all members of the Greek parliament…They are not better then us with some of us living on 200Euro per month…Past & Present politicians should be slaughtered in Syndagma square for their crimes against us the poor and the vulnerable and against the country in which they took the Oath to faithfully execute, preserve, protect and defend the Constitution of the Hellenic Republic together with the Greek citizens to the best of their ability…This Oath of Office never materialized till present…

  8. What does slaughtering politicians achieve? Does that make for better governance or is it a step towards anarchy followed by despotic rule. Such thinking led rise to the NAZI-Communist feud and brought about one of the darkest eras in world history. Try thinking instead of feeling about issues.

  9. Antonis Samaras at the Thessaloniki International Fair ;”There will be no need for any new measures beyond what has already been agreed.” Barrack Obama; “You can keep your health-plan.” Does anyone see a pattern?

  10. Thank you…If I am an idiot what about you??? Think very carefully about that question…

  11. It’s not Greece that doesn’t won’t changes, it’s the politicians with their parasites side by side for personal interests and gains who do resist any changes from fears of losing their hot seats…That is the answer to your comment and to all other readers from Greece and abroad…Remember that Greece joined the EU with fake statistics…Remember that this crisis or the bankruptcy of our country is caused by both major parties Pasok & Nea Dimocratia…Corruptionocracy in Greece will never end because we have corrupt politicians…

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