Greece’s finance minister, Euclid Tsakalos, will reportedly be the top Cabinet official that will sign his name to a written assurance that the leftist Greek government will not repeat a welfare spending initiative similar to this month’s “Yuletide bonus”, announced by Alexis Tsipras for 1.6 million pensioners in the country.
The demand emerged during Tuesday’s EWG meeting – held via teleconference – as Eurozone members’ representatives on the council said they wanted Athens to commit to not repeating the measure or making such a bonus a permanent spending move.
Greek PM Alexis Tsipras made the announcement in a televised address earlier in the month carried by the state-run broadcaster. The measure means that 617 million euros of a primary budget surplus for the ongoing year, mainly achieved via a “tax tsunami” that inundated Greece in 2016, will be doled out to pensioners receiving 850 euros or less in month social security benefits.
However, no asset or property criteria will be used in granting the bonus, allocated asymmetrically, i.e. people getting less benefits will be eligible for a bigger bonus. The cash will also be tax-free, another divergence from standard fiscal practices.
In a late-night bid to paint the demand in a neutral light, a government source said Athens does not have a problem in offering the written assurance, as “there is no intent to violate terms of the (current third bailout) agreement.”
A continuation of Tuesday’s EWG meeting on Wednesday is expected to generate a decision on whether to unblock short-term debt relief measures for Greece, which were frozen by the ESM last week until European creditors could decide if the bonus negatively affected memorandum-mandated fiscal targets.