Handouts planned after bailout exit celebration

Just two days after Prime Minister Alexis Tsipras’ speech on the significance of the bailout exit in Ithaca, the government is proceeding with untrammeled talk of handouts.

Government members have already opened the coffers and are handing out promises, despite the fact that post-memorandum Greece is a far cry from a regular country.

The markets predict an extremely polarised pre-electoral period, and creditors fear that the Greek economy may once again be derailed, due to the climate that is being cultivated.

Even top ministers, including Finance Minister Euclid Tsakalotos, are worried that a crescendo of handout pledges can lead to a slippery slope. They are mainly concerned that there may be a halt of reforms that must be implemented, and that the government that will be formed after the cabinet reshuffle will be preoccupied by a race to win back voters.

The agenda includes promises to civil servants, talk of a suspension of pension cuts, a hike in the minimum wage (even without the consent of creditors), and a distribution of part of the large primary surplus.

“The primary surplus that exceeds targets will be distributed to those most harmed by the crisis. We will see that in 2018, as well as another one billion euros in 2019,” said Alternate Social Solidarity Minister Theano Fotiou.

“This is the first period of freedom for the government after the end of the memorandums. Moreover, it is not necessary to implement additional reforms, beyond our existing commitments,” she added.

Suspending pension cuts?

Labour Minister Effie Achtsioglou has spoken about tax and insurance contributions cuts worth 750mn euros in 2019, as well as about not implementing planned pension cuts that have already been passed into law.

Achtsioglou also said that the government plans a hike in the minimum wage at the end of the year, or at the beginning of 2019.

Deputy Labour Minister Tasos Petropoulos, who was one of the architects of the law that will cut pensions on 1 January, 2019, is now telling pensioners that there is a way to avoid pension cuts.

Tax , insurance contribution cuts and hiring

Administrative Reconstruction Minister Olga Gerovasili said that the government is reviewing measures that will be implemented next year to offer relief to every Greek citizen, and the middle class in particular, with tax cuts and a reduction of insurance contributions.

Gerovasili said there will be “as much hiring of civil servants as the public sector can endure. That means there will be a continuation of state hiring, which contributed to the unemployment rate falling below 20 percent.

Thessaloniki International Fair

The Thessaloniki International Fair will be a crucial juncture.

Tsipras will unveil a three-year plan for handouts, even as creditors will be in Athens for the first post-memorandum evaluation, in the framework of intense fiscal surveillance.

How the planned handouts can be reconciled with the strict oversight of creditors is a question that the government will have to answer quickly.

The government is glaringly ignoring the broader economic environment, with Italy and Turkey creating turbulence in the markets, and is stirring concern among those who fear a new crisis in the European economy.

Whoever dares to talk about the existent dangers is targeted by the government and the “unofficial channels” that defend the government line.

This situation will be heightened in the coming months, at least until the drafting of the 2019 state budget, where public expenses for wages and pensions will be specified.