Gov’t focus shifts to prior actions, pension reform

Gov’t focus shifts to prior actions, pension reform

The government faces another tough week as it must start work on a second list of prior actions agreed with the country’s creditors and lay the groundwork for hugely contentious reforms to the Greek pension and taxation systems.

Prime Minister Alexis Tsipras on Saturday sought to gain some support from the political opposition for one of the toughest challenges he faces in the coming weeks: a controversial overhaul of the pension system that will bring with it further reductions to monthly payments.

An initial proposal for the creation of two cross-party committees – one that would elaborate the government’s proposal for an overhaul of the pension system and the other for the discussion of a revision of the Greek Constitution – was not accepted.

But the party leaders discussed the issue of pensions in detail, amid a broad opposition to further cuts, as well as the refugee problem and calls for a change to the electoral law.

Opposition leaders have been reluctant to offer political backing for more austerity, especially after Tsipras’s refusal to consider forming a broader coalition following his re-election in September.

But most are also keen to ensure that the country’s third bailout remains on track so that Greece does not face the risk of bankruptcy and a possible exit from the eurozone yet again.

According to sources, the government is planning to bring the pension reform bill to Parliament before the recess for the Christmas holidays.

Although Greece’s creditors have insisted on the need for the pension overhaul, it is not on the second list of prior actions that the government has been asked to legislate by December 11 in order to unlock the next loan tranche of 1 billion euros.

Plans for increasing taxes on farmers have also been removed from that list, though they are also expected to be brought to Parliament in the coming weeks, possibly along with a broader overhaul of the Greek tax system, another demand of creditors.

Although Tsipras is aware of the political risk of bringing a barrage of painful reforms to Parliament, he is also keen to honor all Greece’s pledges to international creditors in order to pave the way for the first review of the latest bailout and open the door for talks on debt relief.

With a majority of just three seats in the 300-member Parliament following two defections during the last vote on bailout measures, Tsipras will be hard pressed to push pension reform, a new tax bill and the new set of prior actions through the House without losing more coalition support.

Sources close to the premier have insisted that there will be no more defections from leftist SYRIZA. But the fragility of the coalition’s majority fueled fresh speculation over the weekend about the possible need for a unity government to be formed or for yet another round of general elections to be held.

Representatives of Greece’s creditors are expected in Athens on December 7 or 8 to monitor the government’s progress in implementing the measures on the second list of prior actions which include the creation of an independent tax revenue service and new rules for the management and sale of nonperforming loans.

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