Greek FinMin: More Fiscal Adjustment Measures Possible After 2018

Saturday, December 31st, 2016
Last Update: 17:08

Greek Finance Minister Euclid Tsakalotos said that more fiscal adjustment measures might be taken after Greece’s third bailout program ends.

Tsakalotos spoke to Sunday’s edition of Kathimerini newspaper saying that there is a possibility lenders will ask for the automatic adjustment mechanism to be extended beyond 2018.

The mechanism would go into effect if Greece does not reach fiscal targets. It calls for immediate spending cuts, including possible slashing of pensions. Hence the fiscal adjustment mechanism has been named the “cutter”.

The extension of the “cutter” after 2018 is a condition that Athens might have to accept during negotiations of the second review of the bailout program, Tsakalotos admitted. He also said that the government has a list of contingent measures, but the measures will not be legislated now but will be enacted if Athens fails to meet the primary surplus target of 3.5%.

The statement was contrary to what several Greek government officials repeat: than no further fiscal measures will be taken after the bailout program ends in 2018.

Regarding the ongoing negotiations on the bailout program review, Tsakalotos said that Athens rejects specific interventions suggested by the International Monetary Fund, namely the reduction of tax exemption limits and pension cuts.

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