Government insists no more austerity needed

Athens rebuffs reports that more tax, pension hikes are in store as IMF repeats stance on budget targets

Government spokesman Dimitris Tzanakopoulos yesterday insisted that a dragging bailout review would be completed in the coming weeks without any need for Greece to impose further austerity measures.

“Illogical demands and demands that fall outside the existing agreement will not be accepted,” Tzanakopoulos told reporters at a weekly briefing.

The spokesman expressed conviction that an agreement on the nature of the medium-term measures for relieving Greece’s debt burden would be adequate to conclude the review. He rebuffed reports suggesting that additional increases in value-added tax, further cuts to pensions and a reduction of the tax-free threshold will be needed.

The key obstacle to the conclu- sion of the review is political in nature, not technical, he said, apparently referring to the fact that the role of the International Monetary Fund in the program – whether it will be essential or technical – has yet to be determined. In comments yesterday, IMF spokesman Gerry Rice repeated the Fund’s stance, according to which additional measures must be taken unless an existing primary surplus target of 3.5 percent of gross domestic product for 2018 is reduced to 1.5 percent of GDP.

A meeting of eurozone finance ministry officials yesterday was not expected to yield any breakthrough and many believe that a Eurogroup meeting scheduled for January 26 is unlikely to produce any concrete results either.

According to sources, Greece’s new deadline is March 9, when the European Central Bank’s Governing Council is set to convene and make a decision on whether Greece qualifies for inclusion in its quantitative easing scheme.

As Prime Minister Alexis Tsipras has repeatedly declared that debt relief and QE will be rewards for his government’s efforts, there are fears that failure to secure them could put his administration on shaky ground.