Greece’s planned pension cuts and tax increases are no longer needed because the nation has been beating its budget targets, Alexis Tsipras, the country’s prime minister, said over the weekend in his post-bailout economic policy speech.
Tsipras told a news conference that the debt relief measures are “the least we can do for a public that has borne huge burdens” and that the nation would “not return to bailouts again.”
Greece currently has a €24 billion ($27.8 billion) cushion, meaning it should be able to sustain itself for about two years before another bond sale would be necessary, according to The Wall Street Journal.
However, the pension reduction, which looks to shrink retirement benefits by another 18% on top of previous cuts, has been passed into law and is still currently scheduled to go into effect in January.
Tsipras also announced a swath of tax breaks over the next several years and plans to boost spending on employment and welfare programs, which he contended would not endanger the fiscal targets set by Greece’s creditors. One-quarter of the population is currently unemployed.
The tax increases are also still scheduled to take place in 2020.
This comes on the heels of Russia’s recent retirement age changes, which triggered protests and sank President Vladimir Putin’s approval ratings. Putin later softened the measures slightly. Tsipras is seeking re-election next year, although he’s far behind in the polls. One reason: He has claimed to end pension cuts since his election in 2015, but he has caved into lenders’ austerity demands more often than not.
In 2010, Greece suffered its worst debt crisis in decades. This resulted the world’s largest-ever bailout, where the nation took on about €250 billion in loans, and beneficiaries saw many a pension cut as the government clamped down on its spending. Since then, Greece has weaned itself off its dependency, but bond markets have begun moving back into volatile territory.
Tsipras has been trying to please the disgruntled population while reassuring markets and European creditors that don’t want Greece to do away with the forced austerity program it adopted eight years ago, in exchange for aid.
He said that the European Commission would receive Greece’s economic projections in mid-October, which would support the claw-back on the pension reductions. The prime minister said officials expect Greece to “far exceed” the 3.5% primary budget surplus for 2019, which would then grant Athens the ability to bar both the future tax and pension hikes.
Tags: Alexis Tsipras, Bailout, Greece, Pension