World Economy

Debt Relief a Condition for More Austerity Measures

Debt Relief a Condition for More Austerity MeasuresDebt Relief a Condition for More Austerity Measures

Greece will implement additional austerity measures agreed with its official creditors on condition of further debt relief that will enable the country to be included in the ECB’s bond buying scheme, Prime Minister Alexis Tsipras said on Sunday.

Athens struck a deal with its international creditors at Friday’s meeting of eurozone finance ministers in Malta on key elements of a reform package that could unlock bailout funds for the country to help it repay maturing debt in July, Yahoo reported.

“Medium-term debt relief measures, able to include us in (the ECB’s) quantitative easing, and a fiscal path that will not be unattainable, is the condition for us to implement the measures we decided,” Tsipras told his leftist Syriza party’s central committee.

Athens agreed to take measures that will cut government spending on pensions by 1% of economic output in 2019, a year after its current €86 billion ($91.09 billion) bailout program expires.

It also committed to tax reforms in 2020 to generate additional revenue equal to another 1% of gross domestic product, mainly by lowering the current income tax exemption threshold.

To make the deal more palatable for Greece the lenders agreed that if budget savings targets are exceeded, Athens will be allowed to implement relief measures to boost the economy.

“What was decided in Malta ... renders the horizon for the country’s exit from supervision visible,” Tsipras said, in a bid to drum up support for the difficult measures his lawmakers will need to legislate.

“After Malta, the road opens for specifying measures on debt relief. This will send a clear message that the crisis is behind us,” he said.

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