Friday

22nd Mar 2019

Greece urged to deliver pension reform quickly

  • "The completion of the first review is of decisive importance," said Dijsselbloem (r), with Greece's Tsakalotos. (Photo: Council of the EU)

Ambiguities were back Thursday (14 January) between Greece and its creditors as the Greek government was commended for its implementation of the bailout programme, while at the same time forced to recognise the role of the International Monetary Fund and reminded that it risked being short of money again soon.

At a Eurogroup meeting of eurozone finance ministers in Brussels, in which the IMF's Europe director also participated, Greece was told to start and conclude quickly the first review of the bailout programme in order to get a new tranche of aid and start the discussion on debt relief.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

"The Greek government has really done a lot of work on a number of packages of reforms," Eurogroup president Jeroen Dijsselbloem said Thursday before the meeting, while noting that "a lot of work is in front".

"The completion of the first review … is of decisive importance for the overall success of the programme and essential to get Greece's economic recovery back on track," Dijsselbloem said after the meeting.

Experts from the creditor institutions - the European Commission, the European Central Bank (ECB), the European Stability Mechanism (ESM) and the IMF - are expected in Athens next week to start the review.

'Reforms must be ambitious'

The centrepiece of the review will be the reform of the Greek pension system, which Athens presented last week and on which the Eurogroup asked for more information.

The reform unifies all the pension schemes into a single system and raises employer and employee contributions, but the government ruled out any cut to the pensions.

The creditors "need to have the data on what the pension reform looks like", Dijsselbloem said.

They will accept the reform if they judge it makes the pension system sustainable, helps reduce the fiscal gap and doesn't harm the Greek economy's competitiveness.

"There are a number of open fiscal issues and they are very strongly related" with the pension reform, Dijsselbloem noted.

The IMF, which is still part of the creditors' "Quartet" but has yet to decide whether to participate in the third Greek bailout agreed last summer, stands out as tougher than other creditor institutions. It has called for a more radical pension reform to ensure that Greek finances go back to some kind of balance.

In an interview with Germany's Sueedeutsche Zeitung published Friday, IMF director Christine Lagarde repeated that "Athens must carry out significant economic reforms".

"Reforms must be really ambitious," she added

IMF's conditions

In recent weeks the Greek government has said it wants the IMF out of the programme. Prime minister Alexis Tsipras has said the fund's role is "not constructive" and "not necessary".

But on Thursday Greece had to back down and accept the IMF's presence and role in the first review.

It is "respected and acknowledged by the Greek govenerment and that is an official position," Dijsselbloem insisted.

The IMF, for its part, "has been very clear that they still want to be part of the programme and are ready to step back in," the Eurogroup president added. "But they have a number of conditions."

"Fiscally it has to add up, the primary surplus [a budget surplus before payment of the debt is counted] has to be delivered, pension reform is an important part of that, and they need to have a good feeling about debt sustainability," Dijsselbloem set out.

In addition to being forced to accept the IMF's presence, Greece was also told that concluding the review was "urgent" if it wanted to get the money it needs to repay its debts.

"The liquidity situation will become tight again in the next few months," warned the ESM director, Klaus Regling.

Regling pointed out that "there is a small primary deficit" and that during the first quarter of the year Greece will face debt service obligations "of about €4 billion".

'Don't interpret too much'

EU sources cited the end of February as a critical moment. Greece is expected to repay bonds in February and March, and two IMF instalments of a total of €870 million are scheduled for March.

The Greek minister responsible for the pension reform, George Katrougalos, said Thursday that the bill would be tabled in January, "so the vote may take place in the first ten days of February".

The warning of a liquidity crisis combined with the stress of the IMF's conditions could be seen as a way of forcing the Greek government to pass a deeper and more painful reform than it is ready to accept.

Athens has said it will not "reduce the main pensions for a 12th time".

But the Eurogroup message could also be seen as a message to the Greek opposition and the public, helping the government pass quickly a controversial bill under the apparent pressure of the creditors.

Tsipras and finance minister Euclid Tsakaloros "think that getting that part of the programme done is crucial of their economic recovery, which is about confidence building," Jeroen Dijsselbloem said Thursday.

After a year 2015 full of tensions and deadlines, it is difficult to anticipate how the upcoming discussions will go.

"You should not interpret to much" what was said Thursday, a top EU official told EUobserver after the Eurogroup meeting.

Fragile EU growth at risk

The commission expects Europe's economic recovery to continue. But slowing Chinese growth, low oil prices and geopolitical tensions threaten to undermine progress.

Greece to force 'moment of truth' for creditors

Greek prime minister Alexis Tsipras travelled to Paris, Strasbourg and Brussels to gather support ahead of a week when he wants to force an agreement on the country's bailout programme.

News in Brief

  1. Petition against Brexit attracts 2.4m signatures
  2. Study: Brexit to cost EU citizens up to €40bn annually
  3. NGOs demand France halt Saudi arm sales
  4. Report: Germany against EU net-zero emissions target
  5. Former top EU official takes job at law firm
  6. Draft text of EU summit has Brexit extension until 22 May
  7. Juncker suggests emergency Brexit summit next week
  8. Macron: Voting down May's deal means no-deal Brexit

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  2. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  3. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  4. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  5. Nordic Council of MinistersNordic commitment to driving global gender equality
  6. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  7. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  8. Nordic Council of MinistersNordic talks on parental leave at the UN
  9. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  10. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  11. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  12. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership

Stakeholders' Highlights

  1. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  2. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  3. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  4. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  5. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  6. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  7. Nordic Council of MinistersSeminar on disability and user involvement
  8. Nordic Council of MinistersInternational appetite for Nordic food policies
  9. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  10. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  11. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  12. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit

Join EUobserver

Support quality EU news

Join us