Athens Under Pressure for Public Pension Scheme Reforms

Within the following week, the government is planning to provide the creditors with the requested clarifications and details while it expresses the opinion that the creditors are trying to apply further pressure as part of a negotiating tactic yet the evaluation will be completed by the end of February.

The vice president of the Commission, Valdis Dombrovskis, stated that: “we are ready and willing to start the evaluation as soon as possible, even within the next week but we will put no deadline as to when it should be completed”

The head of the ESM Klaus Regling also made statements towards the need for a swift completion of the evaluation of the reforms. He stressed that a result must be achieved in due time otherwise the cash flow of the Greek economy might have problems again.  

The Greek FinMin, E.Tsakalotos noted that: “everybody has good will, so I believe that we will be able to complete the evaluation, possibly within the next four weeks”. He also clarified that the Greek government has accepted the participation of the IMF in the rescue program and it has acknowledged this obligation towards its' creditors.

The reform of the national pension scheme is the main point of interest and pressure for the EuroGroup, yet the institutions (the mechanisms appointed by the creditors to overlook the compliance of Greece to the rescue program agreement) are pushing for further fiscal measures in order to close the fiscal deficit and achieve the goal for a primary surplus in 2016-2018.

The EuroGroup asked that the Greek government will collaborate closely with the institutions so that the first evaluation of the program will be completed thus opening the route for a possible re-profiling of the debt and the participation of the IMF.

On her behalf, the head of the IMF, Christine Lagarde pointed that it might take the second half of the year before the IMF can participate while she repeated that the conditions for the participation of the IMF include measures which will make the debt viable.

Mrs Lagarde said that “the Greek debt must be re-profiled and re-organized so that it will be viable and will not burden the economy” while she described the National Pension Scheme reforms as “central point of the reforms”.

Valdis Dombrovskis noted that “It is certain that the IMF considers the viability of the debt as a prerequisite for its' participation to the program. In the end this a decision which will be made by the governing board of the IMF but they will have to see what kind of measures are being discussed. They are willing to use our analysis with regards to the cost for the coverage of the debt. Obviously the conclusion is that the debt to GNP ratio is too high, yet when one looks at the cost of coverage, the grace period, the very low interest rates, then the cost seems very manageable. In reality it is lower than the cost for Italy and Portugal and this is an argument that the IMF has accepted with regard to the viability of the debt”.