Tougher Eurogroup stance raises concerns

Government spokesman Dimitris Tzanakopoulos sought yesterday to downplay the Eurogroup’s demand that Greece find ways to offset the 28-million-euro shortfall due to its unilateral decision to suspend valueadded tax hikes on the Aegean islands, saying the issue was “of minor significance” and that it concerns a “small-scale fiscal adjustment.”

On Thursday, the Eurogroup blocked the disbursement of a 15-billion-euro tranche of funding to Greece due to the government’s decision. The tranche will most likely be released in early August, after Greece has approved cuts worth 28 million.

Tzanakopoulos said he was confident the tranche would be disbursed in coming days and denounced several media outlets, saying they had blown the issue out of proportion. Analysts however say that the Eurogroup’s tough stance could signal more trouble down the line for Prime Minister Alexis Tsipras, who has claimed the VAT hike suspension could last as long as the migration crisis endures. But this will be difficult as it was made clear to Greece that the VAT discount cannot continue beyond 2018.

For his part, Defense Minister Panos Kammenos said that part of the funds to offset the 28-million-euro shortfall would come from an overhaul of the defense sector. His plans drew a response from the Panhellenic Federation of Military Officers, which sent a letter to Finance Minister Euclid Tsakalotos asking that no more cuts be made to the Defense Ministry’s budget.