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Troika Puts More Greek Austerity in Limbo

IMF Managing Director Christine Lagarde
IMF Managing Director Christine Lagarde

Just a day after International Monetary Fund (IMF) officials said they would push more austerity measures on Greece, they’ve joined the other two of the country’s lenders, the European Union and European Central Bank, in saying there will be a hiatus on more harsh conditions for six months.
That would push the prospect of more pay cuts, tax hikes and slashed pensions past the German elections, giving Chancellor Angela Merkel – who has championed Greek austerity – a breather from criticism.
The IMF had said that unless Greece steps up privatization and goes after tax cheats that it would order more austerity, although Prime Minister Antonis Samaras last month vowed that wouldn’t occur again after the Parliament approved a $17.45 billion spending cut and tax hike plan.
The newspaper Kathimerini said the temporary change-of-heart from the Troika does not mean Greece won’t have to keep meeting fiscal targets or face consequences. The lenders said they want to give the Greek government a chance to implement current measures and structural. Keeping down social unrest in Greece means the country’s economic crisis won’t be a pre-election campaign problem for Merkel as Germany votes in September, the newspaper said.
A high-ranking official at the Greek Finance Ministry who is in a position to know the substance of a meeting of Troika officials that took place last week in Brussels told Kathimerini that foreign auditors are particularly concerned about lagging efforts to crack down on tax evasion and expect tax collection targets to be met before the approval of any further rescue funding. The ministry official said it was clear that the Troika was displeased that authorities last year only conducted some 30 percent of tax inspections that they had agreed to.
It is hoped that imposing a moratorium on austerity will mean that the wobbly coalition government can focus on implementing tax collection measures as well opening up closed professions without sparking further protests, strikes and riots that brought down the previous government of then-PASOK Socialist leader George Papandreou.
The IMF, in a report on Greece, said it was anxious that getting tough now would cause a backlash that could weaken the government. In an interview with Sunday’s Kathimerini, IMF chief Christine Lagarde said that creditors could approve another debt write-down for Greece if the country meets its commitments.

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