Tsakalotos: Irrational the demands of the IMF

Tsakalotos: Irrational the demands of the IMF

Athens, March 3, 2016/Independent Balkan News Agency

By Spiros Sideris

Finance Minister Euclid Tsakalotos welcomed greater involvement of the parliament in the monitoring of the financial assistance program for Greece, the committee on Economic and Monetary Policy at a meeting on economic dialogue, on Wednesday. “We need an honest mediator that would represent different views from different political perspectives, to examine the economic and social impact of the program”, he said, referring to the new working group of the House for the macroeconomic adjustment programs.

E. Tsakalotos said that the Greek strategy is based on the completion of the ongoing assessment of the current program as soon as possible, as he fears that delays will make the planned reforms, such as the ones in the pension system more difficult to promote. “The institutions left Greece on February 5 with the promise that they would return within ten days. But we are still waiting. We don;t have time”, he said. Greece is currently negotiating for a new tranche of financial aid.

The pension reform is a particularly “hot” issue for Greece. E. Tsakalotos explained that the early retirement arrangements are reduced and that the government is now working to merge 300 different pension funds into a single fund with common rules for all. “This is a radical reform”, he said. He criticized the International Monetary Fund’s insistence on further cuts in pensions, because, according to IMF, the pensions are a very large share of social spending in Greece. ”The IMF must realize that this is very difficult to change during a recession. Pensions have been cut 11 times, leading to a reduction of 40%. And what we need to realize is that pensions are a form of family income in Greece today. We hope the IMF becomes more reasonable”, he said.

The FinMin referred to various reforms this government must promote, while highlighted some differences that continue to be an obstacle for the agreement on the disbursement of a new tranche. “The institutions do not agree on the issue of budget deficit. The IMF asks for additional measures. Our views are closer to those of the European Stability Mechanism, the Commission and the European Central Bank. At this stage we believe that taking more measures is politically difficult and economically counterproductive. We do not need measures that will strengthen the current cyclical tendencies”, he said.

Asked about the main obstacles on the path to growth and jobs, the minister said that the reform of public administration is the number one ambition “for the good of the economy and of Greek citizens”, but added that the development strategy that will be submitted in the institutions will not be one-dimensional: We must improve tax collection, increased liquidity for SMEs, and reduce non-performing loans, so banks can lend money again, instead of being “zombies”. There is need for non-systemic banks, such as Sparkassen, and the financial sector and interest rates must be improved. All this will be included in the development strategy.

Asked about the impact of the refugee crisis in Greece, E. Tsakalotos said his reform o objectives do not change as a result of this crisis. “But if in retrospect, it is proven that there were adverse effects, they should be recognized”, stressed the minister. He also said that the European Commission’s payment system for Greece is one of the problematic areas, as payments are often delayed, which complicates the situation in a country facing liquidity problems. Finally, the FinMin expressed his concerns that due to the low social spending for the Greek population, the refugee crisis will be used by the far-right parties.