By Vassilis Kostoulas
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Achieving annual fiscal targets is not a sufficient enough reason to suspend a pending round of social security spending cuts, institutional creditors continue to stress to the Tsipras government, amid a crescendo of statements and pledges by the leftist-rightist coalition over the recent period questioning the need for the austerity measure.
According to information collected by “N” this week, creditors are demanding detailed and comprehensive documentation by Athens as far as the structural aim of the austerity measure, namely, to achieve and maintain the sustainability of Greece’s social security system for years to come, based on current forecasts and projections.
Harmonizing pension rates for beneficiaries that received benefits before 2016 with social security reforms passed after the specific year is on line for Jan. 1, 2019, a measured agreed to by the Tsipras government with creditors in 2016 and subsequently ratified by a slim Parliament majority the same year. In broad terms, some 30 percent of all social security beneficiaries in the country will see reductions if the measure is implemented, a prospect that the poll-trailing government coalition wants to avoid at all costs heading into an election year.
The goal, according to the same information, is to formulate a “convincing story” vis-a-vis creditors’ top auditors, who are now tasked with overseeing the “enhanced supervision” regime that the Greek state finds itself after the third and last bailout, which concluded on Aug. 20. The same “convincing story” must be conveyed to international lending markets. Would-be sovereign lenders still appear cautious over the country’s economy’s prospects and the Greek state’s finances.
Nevertheless, it’s also clear that creditors are listening to Athens’ arguments, essentially leaving open the prospect, in theory, of changing their position on the pension cut measure. Greek Prime Minister Alexis Tsipras’ recent eyebrow-raising reference that the social security system in the country will face less pressure in the future, due to the high number of pensioners now over the age of 70, according to the same information, wasn’t considered as unreasonable. Tsipras was alluding to the fact pensioners over the age of 70, who often receive higher monthly benefits than people who retired after successive reforms in the country’s pension system since 2010, are nearer to the end of their life – a statement that the political opposition in the country absolutely vilified as macabre and callous.
Besides whatever speculation in European capitals and the Tsipras government’s – public -confidence that the austerity measure will be avoided, final decisions will come in November. The measure’s originator, the International Monetary Fund (IMF), appears steadfast in its position that another round of social security spending cuts is necessary in Greece to maintain the system’s sustainability.
The next venue where the issue may be broached, albeit in an unofficial manner, is at a Thursday EWG meeting.
