Measures with opt-out clauses?
The government intends to add an opt-out clause to some of the bills to be tabled in Parliament concerning the measures it agrees on with the country’s creditors, which means that if the fiscal numbers come in better than projected, Athens will not have to implement the extra austerity package in its entirety. At the same, a leading International Monetary Fund official yesterday suggested that the fiscal targets could be relaxed due to the refugee crisis.
Alternate Finance Minister Giorgos Houliarakis told Parliament on Tuesday that if revenues turn out better than expected, then “a number of these measures will not be implemented.” Asked to clarify whether the government plans to pass measures it will not enforce, he said that “if the revenues exceed the targets, there will be scope created for some measures that we will vote for now not having to be implemented in the end.”
The European Commission appears to be in favor of the government’s idea, but it remains to be seen whether it will be included in the updated bailout agreement after the ongoing review.
In an interview on Tuesday with German newspaper Handelsblatt, the IMF’s research director, Maurice Obstfeld, expressed the Fund’s intention to allow for a more relaxed fiscal policy in Greece as the country also has to handle the refugee and migrant crisis.
However, he made it clear the government will still need to move ahead with structural reforms and that the eurozone must lighten Greece’s debt.
“The refugee flows will not last for ever. On the contrary, the Greek fiscal issues are a long-term matter. For Greece to be successful it will have to streamline its finances. Taking into account the high cost of pensions, it is hard to imagine how that streamlining will be achieved without a pension reform,” said Obstfeld, adding: “In the short term there can be some flexibility on the budget targets. However, expenditure containment and structural reforms remain necessary, as does a debt restructuring.”
