An effort to conclude an agreement between the government and the troika on about 11.5 billion euros of spending cuts is likely to lead to the retirement age in Greece rising from 65 to 67, Kathimerini understands.
Sources said Thursday that the coalition is poised to concede to the change as part of the austerity package demanded by the troika. Greece overhauled its pension system in 2010 but a new retirement age rise would lead to savings of 1 billion euros per year. The government believes this measure is a less damaging step than seeking the savings elsewhere.
“The troika has to accept our less harsh measures when two-thirds of the package is coming from cuts to wages, pensions and benefits,” a government source told Kathimerini, adding that the increase in the retirement age is likely to be easier for members of the coalition to accept, rather than “four extremely tough” measures that would have to be taken to find 1 billion euros in savings.
Nevertheless, the government still faces some tough choices to settle on the 11.5 billion euros of cuts with the lenders.
Kathimerini understands that one of the options being considered is the scrapping of the tax-free threshold, which is currently at 5,000 euros after being lowered last year. The troika has proposed that as part of an overhaul of its tax system, Greece should introduce just four brackets, with those earning up to 22,000 euros paying 18 percent income tax, those earning between 22,000 and 45,000 paying 35 percent in tax, those on 45,000 to 100,000 paying 40 percent, and anyone making over 100,000 paying 45 percent.
The government received a boost Thursday when International Monetary Fund spokesman Gerry Rice said there was a possibility that Greece could be given more time to meet its fiscal targets, although this would depend on the “ability to offer financing.” “There are good arguments to extend the period for Greece to implement its fiscal adjustment,” he said.
Meanwhile, Greece’s representative at the IMF, Thanos Catsambas, denied that in an interview with the Wall Street Journal he had said Greece would need a third bailout. “Greece will require additional financing, which may take the form either of official sector involvement or of additional loans, hopefully on more favorable terms,” Catsambas told the newspaper.
He later said he was referring to the existing program, not a new one.