World Economy

Greece Braces for More Austerity

Greece Braces for More AusterityGreece Braces for More Austerity

Greek Prime Minister Alexis Tsipras braces for yet another vote on additional austerity measures, as European creditors remain at loggerheads with the International Monetary Fund about how much debt relief the country will get for its pain.

Lawmakers in Athens are scheduled to vote Sunday evening on an omnibus bill that includes measures ranging from the taxation of diamond dust and coffee to the transfer of thousands of real estate assets from the state to a new privatization fund, Bloomberg reported.

The debate will test the resilience of Tsipras’s three-seat parliamentary majority, as eurozone states resist calls from the IMF to set less ambitious fiscal targets and hand Greece more generous debt relief.

Approval of the measures is one of the prior actions Greece has to fulfill to unlock the next tranche of emergency loans from the European Stability Mechanism, the currency bloc’s crisis-fighting fund. The Eurogroup of 19 finance ministers will convene Tuesday to assess the country’s compliance with its latest bailout agreement struck in the summer of 2015. A positive assessment is also a condition for the Eurogroup to ease the servicing terms for over 200 billion euros ($225 billion) of bailout loans handed to the country since 2010.

  Fully Committed

The Greek government is “fully committed’’ to implementing the measures in the program and has taken a “very constructive” approach in talks, which in turn should lead to a successful negotiation, Eurogroup head Jeroen Dijsselbloem said in a Bloomberg Television interview Friday. “On the basis of that confidence, we’re now entering into a discussion about debt relief,” Dijsselbloem, who is also the finance minister of the Netherlands, said from the Group of Seven meeting in Sendai, Japan.

The Washington-based IMF proposed that interest and principal payments on Greece’s European bailout loans be deferred until 2040, and that maturities on those loans will be extended to 2080.

The eurozone expects Greece to maintain a budget surplus level which the IMF has said is a “far-fetched fantasy.”

In the quarrel between creditors, Tsipras’s government has sided with the eurozone, and the measures being put to vote on Sunday assume that Greece will achieve a surplus before interest payments equal to 3.5% of gross domestic product by 2018.