Greek Official: Further Pension Cuts Are Non-Starter in Creditor Negotiations

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The International Monetary Fund’s (IMF) Greek bailout program expires in March. In order for the country to keep getting help from the institution, it must reform its pension system.

Greece offered a pension overhaul plan last week, which included benefit cuts of up to 30 percent.

But Labor and Social Security Minister George Katrougalos says further benefit cuts are “an absolute red line” that won’t be crossed in negotiations with creditors.

From Bloomberg:

Greece’s “absolute red line” in negotiations with its creditors? No further cuts in primary pensions.

Labor and Social Security Minister George Katrougalos says the government’s proposal of raising 600 million euros ($651 million) through increased mandatory contributions is a more palatable option, pitting it against creditors, who say it may hurt growth. The country’s newly-elected leader of the main opposition New Democracy party leader, Kyriakos Mitsotakis has also said he won’t back such an increase, ensuring the government’s slim parliamentary majority will be tested.

[…]

The bind Greece finds itself in shows the limited room for maneuver the government has as pension reform becomes the most contentious issue in the country’s first review under its new bailout, set to begin in the coming days. Representatives of the country’s creditors are due in Athens on Jan. 18, according to Katrougalos. Completing the review is a condition for Greek debt relief talks to begin.

Greece must satisfy the International Monetary Fund that its pension reforms are far-reaching enough to put the country’s finances on a sustainable footing, as the fund decides whether it will remain involved in the Greek bailout after its program expired in March.

Read about the initial package of reforms here.

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