Six-month break from austerity

Six-month break from austerity
Representatives of Greece’s international creditors – the European Commission, European Central Bank and International Monetary Fund, known collectively as the troika – have decided on a six-month moratorium during which they will not demand any new austerity measures while also insisting that the country stick to its promises, Kathimerini has learned.

The aim of the troika is to give the Greek government a chance to implement a raft of measures and structural reforms committed to in exchange for continued rescue funding, while also attempting to ensure that Greece and its debt problems do not become a pre-election issue in Germany, which is gearing up for polls in September, sources have indicated.

A high-ranking official at the Greek Finance Ministry who is in a position to know the substance of a meeting of troika officials that took place last week in Brussels told Kathimerini that foreign auditors are particularly concerned about lagging efforts to crack down on tax evasion and expect tax collection targets to be met before the approval of any further rescue funding. The ministry official said it was clear that the troika was displeased that authorities last year only conducted some 30 percent of tax inspections that they had agreed to.

It is hoped that imposing a moratorium on austerity will mean that the government can focus on implementing tax collection measures as well opening up closed professions without sparking further social unrest, and losing even more political capital, by introducing the new reforms.

The IMF, in a country report on Greece released on Friday, expressed concern that Greek authorities may face a backlash from austerity-weary citizens this year.

Ensuring that Greece does not become the focus of what is expected to be a hotly-contested election campaign in Germany is another fear. Germans, who have invested the most in Greece’s bailout, will be reluctant to hear about fresh resistance to austerity in Greece even as speculation mounts about another haircut, sources suggest.

In an interview with Sunday’s Kathimerini, IMF chief Christine Lagarde said that creditors could approve another haircut for Greece if the country meets its commitments.

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