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Eurogroup chief Centeno, Greek Budget 2019 leave space to avoid pension cuts

Head of Eurogroup Mario Centeno opened the door a bit wider for the possibility that the measure for further pension cuts may not be implemented as of 1.1. 2019. The measure is “a fiscal” one and not a “structural measure,” he said on Monday.

He suggested that there may be a compromise between Greek government and creditors over the pension cuts.

“This measure was indeed not a structural policy measure, it was intended to be a fiscal measure and we all know the fiscal target that Greece has established for 2019 and for the following years,” he stressed.

“We all know also that the fiscal situation of Greece today looks much better than 18 months ago, precisely when this fiscal decision was set. So what is important right now is that Greece continues to fulfill its commitment, this is what may bring the overall fiscal situation,” Centeno told journalists after the Eurogroup meeting.

He added that it is important that Greece sticks to its commitments in order to meet the fiscal targets “but we expect Greece to meet its targets.”

Centeno said further that there are talks about the measure of pension cuts and “that’s why there are two scenarios” in the draft Budget 2019.

On Monday, the Greek government submitted the Draft State Budget for 2019 to the Committee for Financial Affairs in the Parliament.

According to the draft budget plan, the Greek economy is expected to grow by 2.5% in 2019. Growth rate in the medium-term program is 2.4%.

The budget 2019 contains two scenarios about the pension cuts.

One scenario included the pension cuts along with supplementary measures and one scenario without the pension cuts.

  • The total volume of pension cuts is 2 billion euros.

Should the pensions be cut, the Finance Ministry projects a primary surplus of 4.14% of GDP.

Apart from Centeno, also European Stability Mechanism chief Klaus Regling expressed satisfaction about the double scenario.

“It is good to have two scenarios and leave the decision to the institutions,” Regling said pointing to the Eurogroup which is expected to take the decision on pension cuts at the meeting in early December.

Budget 2019 is the first which is free of a bailout program after almost a decade.

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