The Greek government was given the clearest indication yet on Monday that its European lenders may agree to its request to scrap the pension cuts that are due to be implemented from the start of next year.
The Greek government will not include next year’s pension cuts in the 2019 draft budget due to be submitted to Parliament on Monday as it steps up its efforts to scrap the measure, which was pre-legislated last year.
The Greek government is set to take the next step in its efforts to call off next year’s pension cuts, when it submits the draft 2019 budget but finds itself in a delicate balancing act between domestic political pressures and the creditors’ concerns.
Finance Minister Euclid Tsakalotos is due to speak with investors in London on Thursday but it is the discussion with the institutions over next year’s pension cuts, rather than market access or investments, that is topping the agenda at home.
The latest indications received by the Greek government from its lenders suggest that a final decision on whether next year’s pension cuts will have to be implemented will not be taken before the Eurogroup meeting on December 3.
The first post-programme inspection by the institutions is due to be wrapped up on Friday with no final decision on whether the pension cuts due to be implemented next year will be called off, but with the Greek government confident that it will be granted this concession by its lenders.
A mixed picture emerged following the first day of talks between Greek government officials and the institutions’ mission chiefs in Athens as part of the post-programme visit by the lenders, which began on Monday.
The institutions have begun poring over Greece’s budget execution data as part of the first post-programme inspection, which will also include a close look at the pledges made by Prime Minister Alexis Tsipras at the Thessaloniki Expo (DETH).
The institutions are due to carry out their first post-programme inspection in Greece this week, with next year’s pension cuts topping the agenda for their brief visit to Athens.
Ahead of the institutions returning to Athens next week for their first post-programme visit, the Greek government has been given some encouragement in its bid to avoid the pension cuts that are due to be implemented next year.