Continuing a repetitive pattern in which Greece’s international lenders threaten to withhold funds unless reforms are made – to which Greece objects and then begins to implement slowly before there’s another stall – talks between envoys from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) and government officials have broken off again.
This time it was Labor Minister Yannis Vroutsis who clashed with Troika representatives and ended negotiations after only five minutes, citing political problems of an unspecified nature.
It was reported, however, the real issue is that Greece is backtracking in the face of data shows runaway debt in its health insurance scheme because of bankruptcies that closed 110,000 businesses who stopped paying into the fund, along with still-operating companies that aren’t paying either. The state pension scheme also had to borrow from the government to pay October pensions.
A committee to oversee changes still hasn’t been set up and there were reports that the government was considering an “emergency” tax on business profits, although critics said that would end Greek Prime Minister Antonis Samaras‘ hopes of luring foreign investors.
Based on the limited response to settlement of debts towards insurance funds, the Greek side is expected to suggest alternatives, such as increasing the number of installments or transferring over debt from 2013 to 2014.
The Ministry will discuss the gradual reduction of insurance contribution by 3.9% next year and developing a new way of calculating lump sums paid out upon retirement, setting off fears from upcoming pensioners that they will suffer huge losses in the money they earned over the years and could be seized by the government on a desperate attempt to control the runaway debt.
The negotiations will include policies to support the more vulnerable classes and the implementation of measures such as the “minimum guaranteed income” although the government has already drastically cut the minimum wage.
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