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European commissioner backs Greece in Christmas bonus versus debt relief row


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European commissioner backs Greece in Christmas bonus versus debt relief row

European commissioner for economic and monetary affairs Pierre Moscovici has backed Greece after the European Stability Mechanism (ESM) moved to suspend a short-term decision for Greek debt relief, Reuters reported Dec. 15.

Several outlets reported Dec. 14 that the ESM was reconsidering its short-term relief measures after Greece's Prime Minister Alexis Tsipras announced a €617 million Christmas payout to low-income pensioners from the 2016 primary budget surplus.

Tsipras also suspended a planned increase in sales tax for the Aegean islands, which saw a large influx of Middle Eastern refugees.

In response, a spokesman for the ESM said its governing bodies had put future relief decisions on ice and were "currently assessing the impact of Greek government decisions vis-a-vis the ESM program commitments and targets," Reuters reported Dec. 14.

Michel Reijns, a spokesman for Eurogroup Chief Jeroen Dijsselbloem, said in a statement that its institutions had concluded that Greece's actions "appear to not be in line with our agreements."

"Some member states see it this way also and thus no unanimity now for implementing the short-term debt measures," Reijns said in a report published the same day by Bloomberg News.

However, speaking ahead of a regular summit of EU leaders, Moscovici said the European Commission had a "different point of view" than the ESM on the matter.

Moscovici said, "The decision taken on debt relief is robust, was taken on the basis of Greece's compliance with the first review, and therefore there is no reason to question it."

French President François Hollande also came to Greece's defense, saying on the sidelines of the EU summit Dec. 15 that "it is out of the question to ask for further additional efforts from Greece or prevent them from taking a number of sovereign measures that respect the commitments" that Greece previously took, according to ABC.

The relief fund and Eurogroup finance ministers reached an agreement Dec. 5 on short-term relief measures for Greek debt. These involved altering the schedule for repayment of bailout loans, debt buying to avoid risk arising out of interest rates and asking Greece to undertake reforms, aiming for a stable fiscal record in 2018 when the current bailout expires, Bloomberg reported.

The International Monetary Fund has disagreed with the Eurogroup debt-relief decision insisting that Europe reduce the Greek budget target from 3.5%, before interest, to 1.5% of GDP. Otherwise, the IMF insisted that Greece go for deeper retrenchment, The Wall Street Journal said Dec. 12.

The IMF, however, is not part of Greece's €86 billion bailout secured from Eurozone creditors in 2015, which allows the country room to increase social spending in consultation with creditors, provided it exceeds primary fiscal surplus targets, Reuters cited EU officials as saying.