Gov­ern­ment backs down over ‘cut­ter’ be­yond 2018

Kathimerini English - - Front Page -

The gov­ern­ment ad­mit­ted yes­ter­day it would be will­ing to ac­cept the ac­ti­va­tion of an au­to­matic fis­cal mech­a­nism, dubbed “the cut­ter,” be­yond 2018, if that en­sures the stalled ne­go­ti­a­tions to wrap up the sec­ond re­view of the coun­try’s third bailout pro­gram come to a swift con­clu­sion.

The cut­ter forces the Greek gov­ern­ment to take cor­rec­tive ac­tion if it fails to meet its fis­cal tar­gets.

De­scrib­ing its change of course from ve­he­ment re­jec­tion of the cut­ter to its ac­cep­tance, gov­ern­ment spokesman Dim­itris Tzanakopou­los de­scribed it as a “con­ces­sion” and “com­pro­mise,” rather than a tac­ti­cal ma­neu­ver.

The left­ist-led coali­tion sought to jus­tify its lat­est con­ces­sion as a ne­ces­sity to over­come the ob­jec­tions raised by the In­ter­na­tional Mone­tary Fund, which in­sists Greece needs tougher mea­sures to meet its fis­cal tar­gets. How­ever, the gov­ern­ment in­sists it will not need to ac­ti­vate the cut­ter as it will meet its fis­cal tar­gets, con­trary to the IMF’s pre­dic­tions.

The move has come in tan­dem with a re­al­iza­tion that the ne­go­ti­a­tions to con­clude the sec­ond re­view are at an im­passe, and the prospect of fur­ther de­lays would surely dam­age the gov­ern­ment’s bid to join the Euro­pean Cen­tral Bank’s quan­ti­ta­tive eas­ing mech­a­nism (QE), be­gin sub­stan­tial debt re­lief talk and ac­cess in­ter­na­tional mar­kets in 2018.

Pub­licly, the gov­ern­ment had re­cently struck a de­fi­ant tone, say­ing it was in no rush to con­clude the re­view, as its fi­nan­cial needs are cov­ered for the com­ing months.

How­ever, the brave face it put on was met with a sim­i­lar show of de­fi­ance from the coun­try’s cred­i­tors, who re­sponded that they are in no hurry ei­ther, es­sen­tially forc­ing the gov­ern­ment to blink first.

The tac­ti­cal change also has to do with the fact that if the re­view is not con­cluded by early March, when sev­eral Euro­pean Union coun­tries head to the polls, then a de­ci­sion could be pushed back to June at the ear­li­est, some­thing which could deal a fa­tal blow to the econ­omy’s re­cov­ery prospects.

Fi­nance Min­is­ter Eu­clid Tsakalo­tos will seek to make use of the gov­ern­ment’s turn­around to ac­cept the cut­ter be­yond 2018 at the Eurogroup on Jan­uary 26 in or­der to get the re­view ne­go­ti­a­tions back on track.

Newspapers in English

Newspapers from Greece

© PressReader. All rights reserved.