While the IMF has asked for 4,2 billion Euros worth of austerity measures for 2019-2020, a government official assessed that neither the Syriza government nor any other can sign off on it in the event that the demand for a primary surplus of 3.5% in 2019-2020 still stands.
With respect to the negotiations, the same source revealed that the IMF is calling for the measures to be legislated. The European creditors counterproposed that a proviso be included in the “political agreement” to be concluded at the December Eurogroup for additional measures, something that was rejected outright by the government.
“We will not enter into discussion about new measures that would have to be legislated from now. It would be undemocratic and dishonest to commit to measures for 2019-2020, when elections will have intervened. No government can pass measures to reduce the income tax threshold to € 5,000 or to cut pensions, “he said.
When asked whether such a demand might trigger political developments, the government source said: “what we know, the creditors know as well,” implying that the lenders would probably not insist on further measures being taken.
As the source explained, “the IMF wants to know the surpluses after 2020 as well. If the IMF insists and asks for measures to make up the difference (from 1.5% of the GDP that it anticipates to 3.5% as per the Memorandum), that means measures amounting to 4.2 billion euros. You go and find a government that would pass such a package, if you can….”
However, the government official predicts a compromise either at the December 5 Eurogroup session or in any case before Christmas due to political developments in Italy.