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Greece resists to IMF’s demands for further pension cuts

Greece cannot accept demands from the International Monetary Fund to cut its pensions yet again in order to achieve a primary surplus target in two years, Greek Finance Minister Euclid Tsakalotos said on Thursday.

Athens has proposed an overhaul of its pension system to make the system viable by increasing social security contributions. That plan has met strong opposition from farmers, who blocked highways for weeks in protest, and other professional groups.

Finance Minister Euclid Tsakalotos said the IMF did not doubt that the pension reform plan was serious but was concerned that it would fall short of the savings needed.
“It thinks that the figures don’t add up for us to reach (a primary surplus of) 3.5 percent of GDP in 2018 and says that, since you have cut down on everything else, where are you going to find (money) if you don’t lower pensions further?”, Tsakalotos told parliament.

Pensions have been cut 11 times since Greece signed its first bailout in 2010. Tsakalotos said Athens could not lower them any more.

Disagreements between the IMF and Athens’s EU lenders over additional reforms Greece must implement to achieve its fiscal targets in 2018 are delaying the first review of its latest bailout, a hurdle the Greeks desperately need to clear to open the way for debt relief talks.

Greece estimates that it faces a fiscal gap of 1 percent of gross domestic product by 2018, while EU lenders estimate it will be around 3 percent of GDP and the IMF puts the gap at at least 4.5 percent, according to sources.

Tsakalotos and deputy finance minister George Chouliarakis chided the IMF on Thursday, saying it should spell out why it saw a much bigger fiscal shortfall, since the country’s economy last year had performed better than projected in the bailout.

“The average estimate when we were discussing it was for GDP growth of -2 percent and now we know it will be between -0.4 and -0.7 percent,” said Tsakalotos.

Greece was also seen achieving a primary budget surplus of 0.2 percent of GDP last year, while the reform program in August had projected a primary budget deficit of about 0.25 percent, Chouliarakis said.

The Fund is also pushing the EU lenders – the European Central Bank, the European Stability Mechanism and the EU Commission – to offer Greece more generous debt relief to make its reform program more sustainable, Tsakalotos said.

He said the delay was having a political and economic cost and could hamper the reforms aimed at getting the Greek economy back on track to growth.

PS to make something clear here: when the IMF talks about ‘necessity for debt relief”, we Greeks, like the IMF. But when the IMF wants ‘further pensions cuts” we don’t. Because the IMF has been applying a wrong program with illusionary goals, anyway.

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  1. I wouldn’t trust the IMF farther than I could throw it. Together with the “institutions” (ex-Troika) they have been running a good cop-bad cop scam for the past six year alternating roles as needed. One month the IMF plays the bad cop while the institutions makes soothing promises, the next they play good cop while the institutions yield the heavy-handed stick. In the end though, regardless of who plays good or bad cop, Greece is still left holding the bag and screwed sic ways to Sunday.

    After all, this is the institution that reelected Christine Lagarde as its Managing Director despite the scathing internal criticism she faced given her (mis)management of the Greek crisis and her overt support for a program that even the IMF itself didn’t believe in (or at least that’s what they want the public to think).

    • Exactly. The problem is that the IMF is not a technocratic organisation, trying to help countries to recover. It is a political organisation, largely financed by the USA, with a clear neoliberal political agenda. However, bad as that is, under Lagarde they have excelled themselves in incompetence, and failed even to achieve neoliberal goals: their management of the Greek crisis was the ultimate in incompetence. Lagarde should take the blame, and instead claims success — typical politicians’ bullshit and lies.

      • The IMF incompetence and own-rule-breaking reached its peak in Ukraine – where it is forbidden to lend since the country is at war – when Kolmoisky simple pocketed the latest IMF tranche of several billion – into a private off-shore account – and used some of it to buy weapons for his nazi Privat Sector army.

        Then a few weeks ago IMF restored the rule it broke for lending to Greece (the one about not lending to countries unable to repay). Restitution did not follow!

        IMF has dropped all pretense of impartiality now.

        • It’s not just them. All of these so-called international umbrella organization have dropped all pretense of impartiality.

          The ECB uses its position to bully countries into accepting political diktats. The EU dices and slices its treaties and rules depending on what it wants to achieve and for whom it wants to achieve it. Some countries (Greece, Portugal, Ireland, etc.) have to abide by the so-called rules, others can have the rules rewritten on demand (GB). Some countries must respect common decisions (Greece). Others can act unilaterally (Austria). The UN applies its criteria selectively with some countries called upon to conform to certain criteria, and others free to do as they wish.

          If I’m a politician, the message I’m getting is that none of these organizations is impartial but instead they are just a fig leaf to cover up the rule of the jungle. So if might makes right, why have any principles?

  2. It is interesting that the IMF is challenging the current Greek government’s computations of the impact of proposed pension reform actions. This is the very same IMF that projected just 12 – 15% unemployment and just 15% GDP contraction from the original austerity measures they imposed.