Greek government rules out new measures

Greece’s government moved quickly on Thursday to rule out any possibility of further austerity measures after an International Monetary Fund report suggested that Athens would need to find several billion euros more in savings over the next few years.

“When the Greek government says it will not take any new measures, it absolutely means it,” said Deputy Prime Minister Evangelos Venizelos after an emergency meeting with Prime Minister Antonis Samaras. The two party leaders met a day after the IMF’s Fiscal Monitor suggested that Greece would need 6.7 billion euros of measures from 2014 to 2016, which is 2.6 billion euros more than foreseen in the agreement between Athens and its creditors.

Sources said that Samaras and Venizelos were alarmed by the rekindling of the discussion about further measures and wanted to let their domestic and international audience know that they would not countenance further cuts or tax hikes.

“It is self-evident that there cannot be any horizontal fiscal measures,” said Finance Minister Yannis Stournaras, who also attended Thursday’s meeting. “Of course, we can adopt structural measures [to save money], though.”

Speaking later at an event hosted by the European Commission’s representation in Athens, Venizelos was critical of the troika and suggested that Germany wielded too much influence among Greece’s lenders. “Blood had to be spilt so there could be a realization that Greece has not just become a fiscal laboratory but a laboratory where democratic institutions are being tested,” said the PASOK leader. He added that troika officials had become “representatives of European governments, particularly those that have a defining role in developments.”

However, Greece’s lenders also appeared keen to douse any speculation about further measures. A Commission spokesperson in Brussels said that a report by the EU’s executive arm, which appeared to favor rises in indirect taxes in Greece, had been “misinterpreted.”

IMF Managing Director Christine Lagarde also tried to quell fears of imminent cuts to pensions and wages. “If there was a shortfall, if there was a gap as a result of efforts undertaken, then we would sit down with the Greek authorities and we would look at what needs to be done and over what period of time,” she said in Washington. “But we are ruling out across-the-board cuts in wages and pensions.”

Lagarde said she was confident Greece would achieve a primary surplus this year but did not want to speculate about further funding or measures.

“We cannot prejudge and anticipate what the outcome of tax administration reform is going to be,” said the IMF chief. “We cannot pass judgement on how much additional collection there will be as a result. We cannot prejudge how privatizations will pan out.”

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