Government Continues Negotiations With Creditors on Tuesday

Greece Creditors

The government continued its negotiations with the country’s lenders on Tuesday, with the Greek side noting that the government has secured all its red lines for this phase of the talks concerning protecting pensions, primary residences, the tax-free threshold, and the lower income earners in social security reforms, government sources said.

According to the sources, negotiations have concluded on the measures totaling 3% of GDP foreseen in the July agreement that target a 3.5% primary surplus in 2018. Of these measures, which correspond to 5.4 billion euros, the government has already implemented measures worth 2.8 billion euros, while the rest of the 2.6 billion will be taken during the next 2.5 years, with an average yearly burden of 1.1 billion euros.

Concerning the International Monetary Fund (IMF), the same sources said it is ignoring the official Eurostat data and questions whether these measures are enough to achieve the primary surplus target of 3.5% in 2018. They also said this is a point of contention between the Fund and the European institutions.

To achieve a compromise between the IMF and the European institutions and keep the Fund in the Greek program, the recent Eurogroup asked Greece to take package of contingency measures in case the targets are not achieved, which would be activated automatically, be reliable, objective and approved by parliament.

However, the government clarified that passing legislation preemptively is contrary to Greece’s constitution and the international legal system. Any laws passed by the Greek parliament have immediate effect and they only lapse when a new law is passed. It also explained that passing contingency measures creates a negative economic climate as it anticipates the failure of the program and deters investment.

The government sources also said they had counter-proposed the establishment of a permanent mechanism for an automatic correction of public finances, which will be activated in case of deviation from the targets and which covers all aforementioned conditions stated by the Eurogroup.

Source: ANA MPA