Eurozone waves budget through

Eurogroup agrees for pensions not to be cut and ‘positive measures’ to be realized via the primary surplus

The eurozone finance ministers have formally approved the Greek budget for 2019, waving it through yesterday’s Eurogroup meeting. With the government readying the amendment that cancels the pension cuts for 2019, attention now shifts to the particularly important second European Commission report on Greece in February, as that is directly linked to debt easing measures.

The nod on the budget seals the decision that the planned reduction of 1.4 million pensions from January 2019 will not be implemented and a series of so-called positive measures will be carried out, to be financed by the primary surplus overrun.

“Greece has fulfilled its commitments. This is excellent news. As we have always argued, the cuts to pensions are not necessary,” European Commissioner for Economic Affairs Pierre Moscovici stated yesterday.

The government has already drafted the bill to that end; this is expected to be immediately tabled as urgent, so that it is voted by December 11. The January pensions are due for payment from December 19, starting with retired freelancers and farmers.

The first enhanced surveillance report on Greece was presented at the Eurogroup in a positive climate without any comment by the council, as it is not associated with any disbursements the ministers have to approve. This will not be the case with the second report though, as that will determine whether central banks disburse their earnings from Greek bond holdings to Athens.

Athens will have to complete a series of reforms to collect the sum of about 700 million euros, which means the disbursement will require ratification from some eurozone parliaments, including the Bundestag. According to a Greek source, “certain areas were mentioned [on the reforms front], where the Greek side continues to work systematically, with its horizon being the next report on February 27, 2019.” Still, none of the 16 reforms required by then has been completed to date.