Pension cuts on the table

Pension cuts on the table

Labor Minister Effie Achtsioglou on Wednesday expressed optimism that the planned pension cuts foreseen in the prior actions approved by Greece’s Parliament as part of its third and final bailout will not be necessary, adding that there is political support on a European level for the move. 

The decision on whether or not to slash pensions further as of January 2019, is becoming one of the highest political stakes for the leftist-led administration, as evidenced by a barrage of statements from government officials in the past months, claiming that after Greece’s exit from the bailout there will be sufficient fiscal space to suspend the measure, if not abolish it completely. 

In an interview on Wednesday with Greek radio station Real FM, Achtsioglou said the measure is not needed “fiscally or structurally,” recalling that scrapping further cuts was put to the institutions during the second review of the program but was roundly rejected. Now, however, the minister said, “there is political support at a European level in order to avoid further burdens on pensioners.”

She argued that the social security system is standing on its feet again and pointed to a surplus achieved by the Single Social Security Entity (EFKA), which will ensure its sustainability in the future.

Greece’s lenders are set to return to Athens on September 10 for a new round of talks on the country’s budget for 2019.

The planned pension cuts will be among the key issues raised by the government.

The institutions are hoping to reach an agreement on all the measures before the draft budget is tabled in Parliament on October 1.

Sources said on Tuesday that the two sides may not reach a decision on the issue next month. In that case, the cuts will be included in the draft budget with final decisions deferred until the final draft is presented in Parliament later in the year. 

Achtsioglou said in the same interview that the completion of its third program means Greece’s lenders will simply monitor the achievement of budgetary targets and the country’s obligations as a member of the eurozone.

“The means to achieve these goals are now left to the Greek government,” she said.

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