EU Official: Greece Must Improve Pension Reforms to Move Ahead With Bailout

A week after a Greek official said further pension cuts were a “non-starter” in negotiations with creditors, it appears the country may have to cross that “red line” if it wants to move forward with its bailout.

Greece released a reform plan this month that delivers savings of about 1 percent of the country’s GDP.

But an EU official on Wednesday said the plan needs to be “fleshed out” and improved if Greece wants to move ahead with its bailout.

More from Bloomberg:

Greece must improve its pension proposals in order to move ahead with its bailout program and start discussions on easing its debt burden, European Union Economic Affairs Commissioner Pierre Moscovici said.

Greek Prime Minister Alexis Tsipras needs to offer “more precise parameters” on his nation’s plan to overhaul the pension system, Moscovici said in an interview at the World Economic Forum in Davos, Switzerland. So far, Greece has a “comprehensive and positive” first draft that needs to be fleshed out, he said.

“We need first to have that pension reform — I want that to happen as fast as possible,” Moscovici said. That would pave the way for finishing the bailout program’s first overall review and “after that, we might discuss about re-profiling of the Greek debt” by lowering the debt service burden, he said.

[…]

Moscovici said he plans to meet Tsipras and International Monetary Fund Managing Director Christine Lagarde during the Davos meetings. He welcomed Greece’s renewed pledges to continue talks toward a new IMF program and said there has been a “constructive” climate around recent negotiations.

Creditors disliked the reform plan because much of the savings to Greece came in the form of higher contributions from workers, which creditors believe could harm the country’s economic growth.

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