Tuesday, January 5, 2016

Greece on a collision course with creditors after vowing not to slash pensions


Athens maintains it will not cut pension spending as part of reforms demanded by the Troika

Greeks have seen a 40pc fall in their pension provision over five years  
Greece has promised not to implement controversial cuts to pensions, putting the indebted nation on a collision course with creditors months into a new bail-out programme.
Athens' left-wing Syriza government said it would not slash expenditure on its main and supplementary pensions as part of a reform plan submitted to international lenders on Monday night.
The reforms have been demanded by lenders in return for the latest release of bail-out cash.
But pensions spending has proven to be the main sticking point for Greece and its Troika of creditors - the European Commision, the European Central Bank, and the International Monetary Fund - during nearly a year of tortuous negotiations.
The IMF has pushed hardest for bold cuts to the govenment's pensions outlay, leading to Greek prime minister Alexis Tsipras demanding that the Fund take no further part in the country's bail-out deal.
Greeks have seen a 40pc fall in their pension provision over the last five years - a shrinkage that has been ruled unconstitutional by the country's highest administrative court.
• The fight to end Greece's Great Euro Depression

Olga Gerovasili, a Syriza government spokeswoman, said there would be no immediate pension cuts to those who have already retired, and expenditure would begin to rise when the economy grows after 2018.
Instead, Athens has proposed an increase in employee and employer contributions and will reduce the amount people will receive in future pensions by up to 30pc.
Pensioners hold a sign saying 'Keep your hands off our funds' at a protest in Greece  Photo: Reuters
The reforms will be discussed with creditors ahead of a bail-out review to be concluded later this month, the European Commission said.
Mr Tsipras has warned that he will not submit to "unreasonable demands" having signed up to an onerous €86bn bail-out in August.
His government is hoping to satisfy lenders' demands by carrying out reforms of "equivalent fiscal impact" in a bid to protect pensions for the poorest in society.
Syriza argues that its social security system is one of the last safety nets in a country where unemployment stands at over 20pc.

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