EU urges Greece to stick to austerity, pension plan

BRUSSELS/ATHENS (BestGrowthStock) – The European Union sent Greece a letter to remind it to stick to the terms of a 110-billion euro ($134.6 billion) bail-out deal, officials said ahead of talks this week on Athens’ pension reform plans.

The comments came after Greece’s Labor Minister said on Monday that the EU and IMF were asking the debt-choked country to stiffen its draft pension reform, which is required by a multi-billion euro “aid for pain” deal agreed this month.

A European Commission spokesman dismissed suggestions the letter related to any shortcomings in Athens’ adherence to the plan, but said the EU executive had to closely monitor Greece’s implementation of the aid program.

“We at the European Commission are obliged to keep a close eye on all the various elements involved in applying the memorandum,” Amadeu Altafaj said.

“This is a normal exchange between the Greek authorities and the Commission services on a draft law which has to follow parameters that have been set up under the memorandum of understanding,” he told a regular news briefing.

Pension reform is a key performance benchmark for Greece under the three-year bailout program, the biggest ever for an individual country. Any glitch over pensions could raise doubts about the Greek government’s resolve to carry out the program.

The draft pension bill allows retirees to draw a full pension after 37 years of contributions, three years earlier than set out in the bailout deal agreed earlier this month.

The bill also fully implements reform in 2018, three years after an EU-IMF deadline.

“We are discussing with Greece how to make the pension reform compatible with the memorandum of understanding,” European Commission’s Director General for Economic and Monetary Affairs Marco Buti had told Reuters earlier on Tuesday.

A joint delegation of the EU, the IMF and the European Central Bank will discuss the issue with senior Greek labor ministry officials in Athens on Thursday.

“2018 seems too late for them and they tell us to go ahead in 2015,” Greek Labor Minister Andreas Loverdos said in a television interview on Monday, commenting on the letter.

Altafaj said the letter was part of regular correspondence with Athens.

“The letter contains strictly nothing new in reference to the memorandum (signed between the European Commission, Greece, the International Monetary Fund and the European Central Bank),” the spokesman said. “It was quite simply to remind people of the terms of the memorandum on this question.”

Greece will submit on Friday an actuarial study to back up its arguments in talks with EU and IMF officials, Loverdos said.

The pension bill is expected to be submitted to parliament in the coming days and to be voted on in June. The socialist government has a comfortable parliamentary majority.

The main labor unions oppose the bill, saying it will put a further burden on the poor who have already been hit by other sweeping austerity measures.

The reform aims at containing public pensions spending by cutting benefits, raising the retirement age for women and discouraging early retirements.

The IMF’s chief economist Olivier Blanchard said on Monday Greece must show determination in implementing the plan agreed with the EU and the International Monetary Fund.

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EU urges Greece to stick to austerity, pension plan