ECONOMY

Tsakalotos to ask for flexibility

tsakalotos-to-ask-for-flexibility

Just days before his first contacts with the heads of the creditors’ representation in Athens, Finance Minister Euclid Tsakalotos is asking the eurozone and the International Monetary Fund for some flexibility regarding the reforms that have to be implemented and will likely have significant social consequences. At the same time the message from the eurozone is that the reforms effort should not be relaxed.

Tsakalotos is hoping that some of the impending measures can be lightened. Sources say that the flexibility he is asking the creditors for primarily concerns social security, nonperforming loans management and labor reforms. The bailout agreement provides for more talks on these matters before any decisions are made.

The call for flexibility arose on Thursday after Tsakalotos met with the US Treasury Department’s deputy assistant secretary for Europe and Eurasia, Daleep Singh. The ministry said that Tsakalotos assured Singh that reforms “are proceeding on schedule,” while noting that “the institutions for their part ought to show some flexibility on outstanding issues with a significant social impact.”

As far as the creditors are concerned, there is little will for backtracking from what has already been agreed – and any changes to the policy mix will have to result in the same fiscal outcome. The heads of the creditors’ mission are expected in the Greek capital on Tuesday to start the negotiations with the government, with German Chancellor Angela Merkel issuing a clear message to Athens: “We are not allowed to relax the repair of the structural faults of the economic and monetary union,” she stated.

At the same time the head of the Euro Working Group, Thomas Wieser, told an Austrian newspaper that not only does Greece have a fiscal problem, but it also requires deep changes in administration, as well as increased citizen confidence in the state so that taxes are paid.