Greece, the European nation hardest hit by the Wall Street-sparked Great Recession, has been granted some modest debt relief, but conditions set the Troika [the International Monetary Fund, European Central Bank, and European Commission] mandate that the regime of austerity continue.
That means that cutbacks in pay, pensions, healthcare, and other social programs will continue, along with privatization of national resources and higher taxes on necessary consumer goods.
But the conditions set also require that the government maintain a high surplus, a measure ensuring that austerity pains will continue.
Monday’s decision at a Eurogroup meeting in Brussels to approve short-term debt relief measures for Greece was a “decisive step towards stabilizing the Greek economy and restoring trust,” the government spokesman said on Tuesday.
Speaking to the press, Dimitris Tzanakopoulos said that the government will continue negotiations with its eurozone partners for longer-term measures to reduce Greece’s huge debt pile, but stressed that Athens will “under no circumstances” agree to more belt-tightening once the bailout program is complete.
Tzanakopoulos was referring to the International Monetary Fund, which has demanded more structural measures in order to join the Greek program.
“The IMF cannot pressure the Greek government for new measures and not its European partners for lower primary surplus targets,” Tzanakopoulos said, referring to a demand that Greece maintain a primary fiscal surplus of 3.5 percent after 2018, a factor considered crucial by the IMF.
His comments echoed those of Finance Minister Euclid Tsakalotos who warned international creditors, including the IMF, on Monday not to pressure Athens to implement measures it had not previously agreed to.
But the IMF isn’t as happy with the deal as Tzanakopoulos indicated and has called for a halt to further austerity measures, as well as a lower GDP surplus, reports To Vima:
The International Monetary Fund welcomed the short-term debt relief measures that were announced at the Eurogroup, however it noted that they are not sufficient.
An IMF officer reportedly told Bloomberg that the Fund insists that the primary surplus targets after 2018 must not exceed 1.5% of the GDP, since anything higher is unrealistic.
As the officer commented, the targets set must not require austerity and argued that the fewer years the high targets are maintained, the lesser the impact will be on the country’s growth, since the 3.5% GDP target will require additional reforms in the pension and tax system.
The officer also called Athens and Brussels to present measures to be taken, should the primary surplus target of 3.5% be maintained after 2018.
The Troika’s official statement is posted here.