EU leaders suspend agreement clinched earlier this month
BRUSSELS (Reuters) — Greek plans for a Christmas bonus for pensioners and value added tax measures raise significant concerns regarding the country's bailout commitments to euro zone lenders, according to a preliminary assessment by euro zone institutions on Thursday.
Greece's parliament on Thursday approved by majority a proposal by the leftist-led government to pay pensioners a one-off benefit which has placed it at odds with lenders who have extended a credit lifeline to the country.
Lenders announced on Wednesday they were suspending an agreement clinched earlier this month to offer Greece short-term debt relief after the initial announcement of the plans last week by Greek Prime Minister Alexis Tsipras.
An assessment of the economic impact of the announced measures was carried out by the European Commission, the European Central Bank, the euro zone bailout fund ESM and the International Monetary Fund -- called the institutions.
"According to a preliminary assessment by the institutions, that was distributed to the ESM members today, the proposed measures by the Greek government raise significant concerns on both process and substance as regards MoU commitments, especially regarding pensions," an ESM spokesman said.
"While those measures reduce the safety margin around the 2016 fiscal target, they are not expected to change significantly the projected fiscal outcomes in 2017 and 2018, although they raise risks regarding the targets, should the measures be extended in the future," the spokesman said.
Euro zone governments, which own the ESM bailout fund, will now have to decide whether to proceed with the short-term debt measures agreed on December 5 that would reduce its public debt by 20 percentage points of GDP by 2060.
