ESM Chief: Tsipras’ Annouced Benefit Measures Undermine Bailout Objectives

The recent benefits Greek Prime Minister Alexis Tsipras announced undermine the efforts creditors make to restore trust in Greece, said European Stability Mechanism President Klaus Regling.

Regling spoke to Spanish newspaper El Mundo saying that, “Greece is committed to discuss, in advance, with the institutions, any measures that may affect the [bailout] program’s objectives, including the use of any surplus.”

This was in response to an announcement by the Greek prime minister that he will distribute 617 million euros to low-income pensioners and reduce VAT to Aegean islands. The funds would come from the 2016 budget surplus. Tsipras made the decision without informing creditors.

According to Regling, the measures “raise serious concerns, although they are not expected to change significantly the budgetary targets for the next two years.”

“In any case, the European Stability Mechanism shall decide on the next steps,” he added.

Regarding the second evaluation of the bailout program, the ESM chief said that negotiations are stalled for the moment, expressing the hope that there will be progress in the near future since all procedures are moving in the right direction.