Saturday

1st Apr 2023

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

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe 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.

Police violence in rural French water demos sparks protests

Protests are planned in 90 villages across France on Thursday to protest against escalating police violence that have left 200 people injured, including two people who are still in a coma, after a violent clash in Sainte-Soline over 'water privatisation'.

EU approves 2035 phaseout of polluting cars and vans

The agreement will ban the sale of carbon-emitting cars after 2035. The EU Commission will present a proposal for e-fuels after pressure from German negotiators via a delegated act, which can still be rejected by the EU Parliament.

Opinion

Dear EU, the science is clear: burning wood for energy is bad

The EU and the bioenergy industry claim trees cut for energy will regrow, eventually removing extra CO2 from the atmosphere. But regrowth is not certain, and takes time, decades or longer. In the meantime, burning wood makes climate change worse.

Opinion

EU's new critical raw materials act could be a recipe for conflict

Solar panels, wind-turbines, electric vehicle batteries and other green technologies require minerals including aluminium, cobalt and lithium — which are mined in some of the most conflict-riven nations on earth, such as the Democratic Republic of Congo, Guinea, and Kazakhstan.

Latest News

  1. EU to press South Korea on arming Ukraine
  2. Aid agencies clam up in Congo sex-for-work scandal
  3. Ukraine — what's been destroyed so far, and who pays?
  4. EU sending anti-coup mission to Moldova in May
  5. Firms will have to reveal and close gender pay-gap
  6. Why do 83% of Albanians want to leave Albania?
  7. Police violence in rural French water demos sparks protests
  8. Work insecurity: the high cost of ultra-fast grocery deliveries

Stakeholders' Highlights

  1. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains
  2. InformaConnecting Expert Industry-Leaders, Top Suppliers, and Inquiring Buyers all in one space - visit Battery Show Europe.
  3. EFBWWEFBWW and FIEC do not agree to any exemptions to mandatory prior notifications in construction
  4. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  5. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  6. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence

Join EUobserver

Support quality EU news

Join us