We’re well on the way to recovery, PM assures Greeks

GREECE’S prime minister, who is seeking re-election next year, said yesterday that the country would not need to cut pensions or raise taxes as planned because it was beating the budget targets agreed with its lenders.

Alexis Tsipras, a Leftist elected in 2015 but trailing badly in opinion polls, also pledged not to row back on those targets now that Greece has emerged from almost a decade of financial bailouts and enforced austerity.

He used a trade fair in Thessaloniki to announce sweeping tax breaks in the next few years, as well as ruling out an early election.

“These relief measures are the least we can do for a public that has borne huge burdens,” he said. “Greece will not return to bailouts again”.

He wants to appease a public fed up with cutbacks while reassuring markets sensitive to any sign of easing up on fiscal consolidation.

Greece emerged from an economic adjustment programme with the European Union in August, but must still keep a primary budget surplus of 3.5 per cent of GDP until 2022. To reassure its lenders, Athens has legislated further pension cuts to take effect in 2019, and a reduction in the taxable earnings threshold from 2020. But Mr Tsipras said both would be unnecessary since fiscal targets would be exceeded.

“We don’t want to proceed with any backtracking that could scupper fiscal consolidation or the core of necessary reforms,” he said. “But we will explain that this measure (on pensions) is not a structural one and is against growth.”

EU and International Monetary Fund representatives are due in Athens today for their first quarterly assessment of Greece’s post-bailout performance. Mr Tsipras said Greece had a multibillion-euro cash buffer that would ensure it did not need to tap financial markets for liquidity during periods of volatility.