German Finance Minister Wolfgang Schaeuble and the International Monetary Fund finally agreed on the Greek debt issue. However what they agreed upon is not what Greece would like to expect. Schaeuble and the IMF’s responsible for Europen Poul Thomsen agreed to a common hard-line, that translates into to increase pressure on Greece.
During the meeting last Thursday in Berlin, Schaeuble and Thomsen agreed to that the Greek government should immediately proceed with the legislation of additional austerity measures.
According to Sunday newspaper Real News, that reveals the agreement, high on the measures agenda between Schaeublee and Thomsen was the IMF’s demand to lower the tax-free allowance. The measure should be legislated now and implemented as of 1.1.2018.
Next to lowering pensions, the IMF has been insisting on lowering the tax-free allowance for pensioners and employees.. These two measures have been the IMF’s top preconditions in order to participate in the Greek program.
Tax-free allowance is currently at 8,500 euro, the IMF want this down to seven or six thousands.
“The most extreme position within the IMF is to lower it down to 4,000 euros,” Real News notes.
With the average salaries for Greece’s employees to have plummeted to 400-500 euros per month – gross or net does not make much of a difference – it seems clear that the IMF does not want the thousands of low-paid labor craft to escape from paying their share to debt repayment.
Another issue where Schaeuble and Thomsen agrred is to intergrate the main pensions in the “cutter”. The IMF insists on further cuts in main pensions saying that the social security system in Greece is not sustainable, while the state budget funding of existing pensions is relative high when compared to other eurozone member states, Real News notes.
According to the newspaper, Schaeuble and Thomsen left open the possibility to adopt the proposal that has fallen into the negotiating table, which will cancel the automatic measures of ‘cutter’ in case the targets for primary surpluses are achieved.
The discussion also focused on the issue of the Greek debt and in particular on the mid-term relief measures; however no decision was taken. Schaeuble and Thomsen discussed the possibility to have a more detailed description on the issue..