The eurozone’s bailout fund has suspended Greece’s short-term debt relief.
Those measures are intended to cut Athens’ public debt, but the European Stability Mechanism said it had put them on hold after the government announced plans to make a one-off payout to pensioners in December without first clearing it with the ESM.
Prime Minister Alexis Tsipras defended the move saying: “Everything the Greek government does is within the framework of the agreement with the institutions. Both Greece and its lenders have to adhere to what has been agreed.”
He has justified it by saying Greece now has a primary budget surplus – meaning it is bringing in more in taxes than it spends, before the repayments and interest on its massive debts.
Tsipras has called the planned 617 million euros in one-off pre-Christmas benefits for low-income pensioners “a social redistribution” adding “it is the least we can do for those who, since 2010, have suffered successive reductions in their pensions and a subsequent deterioration of their living conditions.”
Greece has been locked in on-off battles with its creditors for years, and analysts said the suspension of the debt relief measures was likely to be posturing in lengthy discussions.
“This is just a way for the ESM and the Troika to make sure the Greeks comply with everything they have to do,” Natixis strategist Cyril Regnat said.