Finance minister’s letter to creditors appeases concerns

Finance minister’s letter to creditors appeases concerns

Opposition pressure on Tuesday prompted the government to publish a letter sent by Finance Minister Euclid Tsakalotos to Greece’s foreign creditors in an attempt at damage control following a rift between Athens and Brussels before the Christmas holidays.

In the letter, the finance minister appeared to address concerns that the SYRIZA government may be defying its commitments in order to pander to voters with explanations over the issues that caused the rift and fresh pledges.

Regarding the Christmas bonus for pensioners that rankled lenders, Tsakalotos said it was a one-off measure and will not be repeated in the future. On the decision to put off raising value-added tax on the islands worst hit by the migrant crisis, he said the freeze will only apply for 2017 and that any shortfall will be covered by the budget.

The letter added that an automatic mechanism for reducing expenditures will be activated if the 2016 budget is found to be off target and pledged that the government will implement all of the commitments made under the bailout agreement.

Tsakalotos’s missive – addressed to the president of the Eurogroup of eurozone finance ministers, Jeroen Dijsselbloem, and European Stability Mechanism chief Klaus Regling – came after creditors froze short-term debt relief measures agreed earlier this month. The decision was rescinded the day after the letter was sent, prompting calls for its content to made public.

The challenge for the leftist-led administration will now be to convince an increasingly disillusioned electorate that it is again accepting a “painful compromise.”

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