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Greek Program Review talks: IMF insists on further pensions cuts 6%-30%

The International Monetary Fund is alive and kicking. And insists to apply its famous wrong “remedies” to the Greek problem, no matter what. The IMF’s representative in charge of the Greek program has arrived in Athens together with the representatives of European commission, the European Stability Mechanism and the European Central Bank. The Quadriga’s arrival marks the opening of the Greek-creditors talks that are supposed to end in a successful  Greek Program Review.

But creditors in general and the IMF in particular are as tough as it gets. According to Greek media reports, the IMF’s Iron Lady Delia Velculescu has plans in her luggage that tend to turn down all Greek proposals for a Pensions sytem overhaul.

Following the strict austerity policy of the IMF in the name of the notorious “Competitiveness”, Velculescu will reportedly reject the social security contributions hikes and push towards new and additional cuts in the current pensions.

The IMF’s scheme is allegedly:

either 6% cuts to all pensions from the first euro or 15%-20% cuts for pensions over €800 or 30% cuts for pensions & supplementary pensions totaling over €1,000.

Aim of the IMF is to save 1.8 billion euro per year on pension expenditure.

When it comes to pension cuts, the creditors refer to nominal pensions gross amount before the first Memorandum of Understanding (loan agreement) of 2010.

In addition, the IMF will push for further decrease of the minimum wage, currently at €586 gross and for mass firing of employees in the private sector. These two measures are not new, they have always been in the plan of IMF since 2010. In the mind of IMF, as the average wages have been decreased also the minimum wage has to follow this path in order to be ‘attractive’ for employers to hire personnel. the minimum wage went from €780 gross down to €580 in 2012.

It will be up to Greek Finance Minister Euclid Tsakalotos to convince the creditors that the Greek program can be successful in a what we could call “milder austerity”.  And this is a difficult task, as the European creditors do not agree with the IMF at all austerity policy points.

For example, the IMF wants austerity measures worth 6.3 billion euro (3.5% of GDP)  for the years 2016-2018, while the Europeans want almost half of this amount.

However, the IMF wants to finally implement all open issues of the first and second Memorandum of Understanding and close the Greek Adjustment Program once for all.

PS when buffaloes fight against each other, it’s the frogs that pay the price – wise Greek saying.

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  1. Euclid Tsakalotos will simper & scrape his way to full agreement of their terms just as he did in July. Nothing to hold one’s breath for here. But the price of staying in the beautiful euro makes it worth all it, right?