No Greek pension deal yet as creditors end first post-bailout review

No Greek pension deal yet as creditors end first post-bailout review

Greece's international creditors seemed likely on Friday to withhold instant approval for its plan to put mandated pension cuts on hold next year, as they wrapped up their first post-bailout inspection of the country's finances.

The country emerged from the biggest economic rescue in history in late August after almost nine years of austerity. It still owes billions and is under post-bailout monitoring by the European Union and International Monetary Fund to ensure it does not deviate from fiscaltargets.

Athens argues it has enough fiscal leeway to unwind cuts in pensions of up to 18 percent that are scheduled to kick in from January while maintaining the healthy surplus its lenders say it needs in order to keep its finances on a sustainable trajectory.

One source said speculation that the inspectors agreed with Greece's view was premature. “A good deal of work is still required,” the source from the lenders told Reuters.

A second source said there had been no conclusion to discussions on the pensions system.

Athens has promised to achieve an annual primary budget surplus – which strips out debt servicing costs – of 3.5 percent of GDP up to 2022.

With that in mind, it legislated pension cuts and tax hikes to take effect in 2019 and 2020 but said in recent days it considered those measures unnecessary since it has been exceeding its fiscal targets.

Greece's preference would be to ditch the pension cuts, which Prime Minister Alexis Tsipras said on September 8 would also be contingent on a review of its budget by the European Commission in mid-October.

Earlier Friday, the state-run Athens-Macedonian News Agency quoted European sources saying lenders considered Greece's social security system viable, and did not discount the possibility of pension cuts being abandoned completely. [Reuters]

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