Express: Europe punishing Greece – “That’ll help their popularity!”

The Express — Greece angered its lenders this month by announcing it would spend about 600 million euros on a Christmas bonus for low income pensioners after beating its fiscal targets for the year.Earlier this week, Germany asked the institutions involved in Greece’s aid programme — the International Monetary Fund (IMF), European Central Bank and the European Stability Mechanism (ESM) — to assess whether Mr Tsipras’ action of giving poor pensioners a Christmas bonus out of the excess revenue collected is compatible with its EU bailout obligations.

Greece  hopes to conclude its second review by early January at the latest but it remains at odds with its European and International Monetary Fund lenders over fiscal targets and labour and energy reforms.

The decision to help poor pensioners “has complicated things”, implying that the second review is going to be delayed, dashing Greek hopes for the county’s inclusion  in the European Central Bank’s quantitative easing programme in the first quarter of next year.

Greek pensioners have been promised a one-off winter payment totalling 617 million euros to the country’s 1.6m low-income pensioners as emergency support.

It was recently announced that 1.2m Greek pensioners live below the poverty line.

Michel Reijns, spokesman to Eurogroup chief Jeroen Dijsselbloem, said in a statement: “The institutions have concluded that the actions of the Greek government appear to not be in line with the agreements.”

He added that some member states see it this way also and thus there is no unanimity now for implementing the short-term debt measures, saying: ”We await a full report of the institutions in January.”Last week the finance ministers of Eurogoup reviewed Greece’s economic progress to finalise a budget for 2017 and set a fiscal target for 2018 of 3.5 percent of GDP to be used as a primary surplus to pay back creditors.

They also called for more austerity measures to be put in place, including more severe labour and reform measures, which called for lifting restrictions on collective dismissals in the private sector, suspending collective bargaining and weakening trade union laws.

According to the IMF’s chief economist Maurice Obstfeld and the head of its Europe division, these new austerity measures are not realistic and cannot be attained.Danish economist Poul Thomsen, director of the IMF’s European department, has also aired doubts over the ability of Greece to meet the harsh austerity targets which were conditions of the country’s 86 billion euro  bailout programme, which would appear to raise doubts over the IMF’s future participation in the three-year rescue plan.

In a joint blog post Mr Obstfeld and Mr Thomsen wrote: ”We think that these cuts have already gone too far, but the ESM program assumes even more of them.

”We do not believe that Greece can come close to sustaining even a modest primary surplus and realise its ambitious long-term growth target without a radical restructuring of the public sector.”