Stournaras, Tsipras clash over fiscal multipliers

Finance Minister Yannis Stournaras and the leader of the main leftist opposition SYRIZA, Alexis Tsipras, clashed in Parliament on Friday during a debate about the impact errors in calculations by the International Monetary Fund had on Greece's fiscal adjustment program.

Responding to a question submitted by Tsipras, Stournaras said that the government had engaged actively in tough negotiations with the troika from the beginning, compared to the chest-thumping of the opposition. «The mistake with the fiscal multipliers had been put on the negotiating table by Greece long before the dialogue began with Mr Blanchard,» Stournaras said, referring to IMF chief economist Olivier Blanchard who, together with another Fund economist Daniel Leigh, admitted in a report last month that the Washington-based organization had made incorrect forecasts about the impact that a rapid fiscal consolidation would have on certain economies, such as Greece’s.

Referring to recent comments by European Economic and Monetary Affairs Commissioner Olli Rehn, according to which the fiscal multipliers' report should not be cause for Greek hopes of reform to its economic program, Stournaras remarked, «clearly Mr. Rehn is mistaken if he believes that the recession is entirely due to Greece's mistakes."

The minister added that there would be no more cuts to salaries or pensions, nor any further tax hikes but only reforms to jumpstart the economy.

Tsipras, for his part, accused Stournaras of having a secret agenda and said that the minister was «more pro-memorandum than the memorandum itself,» referring to Greece's loan agreement with foreign creditors. The leftist leader added that the government's economic policy program had failed, noting that authorities had pointed to further wage reductions in 2014.