Juncker dampens Greek pension hopes

Juncker dampens Greek pension hopes

As government officials seek to convince visiting foreign auditors that the pension cuts slated for January 1 are not necessary for Greece to meet budget targets, European Commission President Jean-Claude Juncker issued a strong message on Wednesday noting that “the measures agreed have to be implemented.”

Juncker, who hailed the “Herculean” efforts of the Greek people to emerge from the country’s financial crisis, made his comments on Wednesday to a group of journalists from news outlets including Kathimerini as the first visit by Greece’s former lenders got under way in Athens – the first since the country’s bailout exit in August.

For its part, the government insists that Greece has enough fiscal space – almost 1 billion euros – to render the pension cuts unnecessary and says that it is prepared to delay the implementation of its countermeasures so that they take place over four years instead of two years, which was the original plan.

Finance Minister Euclid Tsakalotos and his deputy Giorgos Houliarakis made the government’s case on Wednesday morning to the Commission’s Declan Costello, Nicola Giammarioli of the European Stability Mechanism, Francesco Drudi of the European Central Bank and the International Monetary Fund’s Peter Dolman.

According to a government source, no one at the meeting believes pensions should be cut on the grounds of the long-term sustainability of the social insurance system. The source described this a “a pleasant surprise.”

The same source said that if the government’s argument is accepted, namely that pension cuts are not fiscally necessary and that it is not a structural measure, then it would be unreasonable for the Eurogroup to refuse.

“Why would the Europeans create a problem if there are good arguments?” the source said, hinting that a decision could be made without the agreement of all eurozone finance ministers.

It also said that the discussions with inspectors are not negotiations, at least at this stage, but rather a briefing on the situation.

Inspectors will continue contacts on Thursday on labor and financial reforms before they meet again on Friday with Tsakalotos and Houliarakis.

The first of four reports by the European institutions – within the framework of Greece’s post-bailout surveillance – will be issued in November.

For its part, the IMF will issue two reports per year.

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