The International Monetary Fund remains firm as firm as the German Finance Minister Wolfgang Schaeuble who has the upper hand when it comes to agreements about Greece. And for the time being it looks as if the IMF, and the European creditors, ESM incl., prepare a s0-called ‘compromise” solution on the back of Greece and at the cost of the people who have suffered immense income loses after three bailouts/austerity packages and seven years of economic crisis..
The IMF reportedly demands more austerity and thus a package that will have to be legislated immediately.
If the target for the primary surplus after 2018 and 2020 remain at 3.5% after the program concludes in 2018, the IMF has a specific vision in order to agree to close the so-called staff level agreement for the second review and so pay the way for substantive discussion on debt.
What does the IMF wants?
No more and no less than austerity measures totaling 4.2 billion euros with pension cuts and lowering the tax free allowance.
This is what Greek media report on Friday afternoon citing government sources.
“No government can pass measures like further cutting pensions or lowering the tax allowance down to 5,000 euro,” the source warned stressing “it would be anti-democratic and dishonest that we commit to this now, when elections will have taken place by then .”
The source estimated that neither this nor any other government can co-sign measures 4.2billion euros with the primary surplus target to remain 3.5% for 2019-2020 and revealed that the IMF wants this measures package to be legislated now.
Alternatively, the European creditors proposed to Greek government that the IMF’s pre-condition is included in the “political agreement” that will be reached at the Eurogroup in December. The government rejected it.
The German finance minister vehemently insists in keeping the primary surplus of 3.5% even after 2018, “if possible for next 70 years,” the source said.
If this demand is approved by the Eurozone, then “the compromise about which finance minister Euclid Tsakalotos spoke in dramatic tone will have taken place on the back of Greece,” news website in.gr commented..
Nothing will be concluded if not everything is being concluded at a Eurogroup meeting later this year, the government source said implying that final decisions will be taken at an extraordinary meeting before the end of the year.
At the Eurogroup meeting next Monday, December 5th, the government expects quite great progress in achieving technical agreement (staff level agreement) with most open issues to be closed.