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‘Coolness’, concern by EZ partners to Athens’ announcements; Regling negative

By N. Bellos

Several EU leaders commented on Thursday on the poll-trailing Tsipras government’s abrupt announcement – last week – of tax breaks and VAT reductions, before and following a Eurogroup meeting in Brussels, with most reactions expressing reservations and concerns over the latter’s impact on closely watched fiscal targets.

Most reactions centered on the premise that post-bailout Greece must meet fiscal targets, namely, annual primary budget surpluses as a percentage of GDP, which for 2019 is 3.5 percent.

While only individual EU officials openly commented on Thursday, next month’s Eurogroup meeting is expected to witness “official objections”, especially by the Netherlands and Germany.  

In exiting the meeting, EU Commissioner Pierre Moscovici merely told reporters that the measures – including a partial re-institution of the so-called “13th pension” – will be evaluated on the basis of their fiscal and social impact.

The French Commissioner, amongst the leftist Greek government’s biggest “boosters” in the European setting, merely added that the cost of the measures vis-a-vis annual primary budget targets will be judged at the right time.

On his part, Eurogroup president Mario Centeno mostly declined to comment directly on the Greek government’s surprise measures, merely adding that he expects Athens to fulfill its commitments.

Greece was not represented by Finance Minister Euclid Tsakalotos, but by Alternate FinMin Giorgos Chouliarakis.

The latter briefed his Eurogroup counterparts over the latest measures, dubbed by the opposition in Greece as “pre-election giveaways” and a “paltry return” of previous “tax storm” unleashed on Greece’s shrinking middle classes.

In response, ESM managing director Klaus Regling expressed the most negative reactions in the chamber, according to reports.

The influential head of the Eurogroup’s emergency bailout mechanism said hike in pension spending and cuts in indirect taxes will lead to a deviation from fiscal targets, while emphasizing that they are “not growth-friendly”.

On his part, German Finance Minister Olaf Scholz again referred to a “success story”, in that Greece has returned to the markets for its borrowing. Speaking before entering the Eurogroup meeting, he nevertheless added that “in the end, I believe all of them (countries) will be careful”, when asked about the relief measures announced last week. 

 Officially, the Greek government measures were not on Thursday’s agenda because the third post-bailout “enhanced supervision” review has not yet been completed.