Problems in the negotiations with the Troika

The Troika, and especially the IMF side, is threatening to blow up the negotiations on the austerity package of 11.5 billion euros, as a few hours before the meeting of political leaders it seemed to reject nearly 1 billion of the total 9.5 billion, for which there had been initial agreement with the government.

 

As stated by a government official in protothema.gr, despite the initial progress and positive impression by the presentation of the FEIR study on the favorable macroeconomic scenario, during the meeting that followed in the ministry later, IMF spokesman Poul Thomsen suddenly appeared to question the effectiveness of all the corrective measures for saving expenditure, thus hinting about even bigger cuts in wages and pensions.

 

This shift seems to surprise even the representatives of the Commission and the ECB, Matthias Morse and Klaus Masuch respectively. The Finance minister tried to bend Thomsen’s objections, while the latter seemed adamant about pushing for even greater cuts in public sector wages.

 

According to the same source, Matthias Morse intervened and called on all sides to renew the appointment for this afternoon after the meeting of leaders, saying that "we will not leave if we do not come to some sort of conclusion."

 

The "hard core" of measures

 

The reversal occurred at a time when the government seemed to be split in two as concerns the package of 2 billion euros that form the hard core measures. Following this development, however, the fiscal gap which the political leaders will be invited to discuss now reaches 3 billion, with the Troika pushing for further reductions in wages which the Finance ministry now appears to oppose.

 

Other sources linked this problem with the relatively good performance of State revenue in early September, giving perhaps somewhat better bargaining power to the Greek side. The political leaders, however, will discuss how they will bridge the remaining gap, as the locked measures with the approval of foreign auditors do not exceed 9.5 billion euros, and even 1 billion of them should not be considered certain.

 

With the new data, it appears that there might not be any proposals for horizontal wage cuts in the narrow public sector, in pensions of 600 euros gross and in minimum IKA and OGA pensions.

 

Also, although it was proposed as a last resort by the government to cover the hole of the program, increasing the retirement age from 65 to 67 years should not be taken for granted, as an IMF expert from Washington is expected in Athens to decide on the efficiency and feasibility of such a measure.