Wednesday, 25 January 2017

Tsipras digs in his heels on his second anniversary in power

Alexis Tsipras

Prime Minister Alexis Tsipras says his government won’t bring another austerity bill to parliament on the eve of a crucial Eurogroup meeting focusing on Greece. Greece’s creditors – its fellow-eurozone countries – are reportedly pressing him to accept a raft of austerity measures that would kick in after the current austerity programme ends in mid-2018.

“There is no way we are going to legislate a single euro of measures beyond what the agreement says, and that applies especially for the period after the [adjustment] programme ends,” he told national daily Efimerida ton Syntakton today, on his Syriza party’s two-year anniversary in power.

Days ago, conservative opposition leader Kyriakos Mitsotakis decried the upcoming anniversary. “Never in the last seven years – ever since the crisis so violently struck Greek society – was the horizon darker for the ship of Greece. Runaway taxation is strangling every productive Greek.”

Tsipras lashed out against the opposition’s accusations of incompetence. “Do [New Democracy and Mitsotakis] … believe that we should agree to legislate in advance for 2019? Do they think we should pass a reduction of the taxable income threshold and a further cut in pensions?”

While Tsipras rules out any possibility of a Greek departure from the eurozone, creditors are concerned about his leftwing government’s tendency to increase social spending, and his ability to maintain a primary surplus of at least 3.5 percent of GDP. That is the amount of tax revenue creditors want Greece to set aside to repay them.

The International Monetary Fund, in particular, believes that the reforms currently undertaken by Greece are not enough for it to achieve such a surplus. It also disagrees with the goal of a 3.5 percent primary surplus, because this “would generate a degree of austerity that could prevent the nascent recovery from taking hold.”

According to figures released on Tuesday, Syriza has managed to generate an unexpectedly large surplus, because tax revenues are above expectations. The finance ministry reports earnings of €54bn last year, €1.68bn above target. This helps to give the state a primary surplus of €4.4bn rather than the target €1.98bn.

That surplus has come at a high cost. Public health sector workers protested outside the prime minister’s office on Wednesday, saying that the national healthcare system “is crumbling”. Contrary to government promises to spend more on health and education this year, the health ministry’s 2017 budget has been cut by €129mn to €4.268bn.

The high surplus also comes in part from delaying government payments to suppliers. The health workers’ union says hospitals owe their suppliers €1.8bn, up from €0.7bn when Syriza assumed power. The union also says no new hires have been made, contrary to Tsipras’ post-election promise to hire 4,500 doctors and nurses.

Greek living standards have also crumbled since Syriza assumed office. A report by the Labour Institute out on Tuesday says that 37 percent of Greek households subsist on less than €10,000 a year.

Three quarters of all households saw their income fall last year, according to the Institute, the private sector’s main labour think tank. Fully one half of households now depend on a pension as their main source of income.

European Commissioner Pierre Moscovici has ruled out an agreement between Greece and its creditors on Thursday, on how to implement the next round of austerity measures. He believes February 20 is the last-ditch Eurogroup before France and Germany - and possibly Italy and Spain – become embroiled in general elections, whose outcome may well make an agreement with Greece even more difficult. 

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