Eurozone suspends Greek aid plan over plans for Christmas pension payouts
Eurozone leaders have put a hold on an agreed debt relief plan for Greece after the Greek government announced it would be giving pensioners in the country a Christmas bonus.
Greek leaders say that the 617 million euro payout is vital for strugging state pensioners in the run up to Christmas. However, the European Stability Mechanism (ESM), which is reponsible for helping any eurozone governments in difficulty, is not happy that it was not approached to agree to the payout. The ESM says it will now look closely at the proposals before any action can be taken.
An ESM statement said that any decisions over aid had been put on hold as a result of Greek government plans to “spend additional fiscal resources for pensions and VAT”. EU leaders are now looking at the impact of the decisions in connection to commitments set out through the ESM agreement, as well as agreed targets. A decision will be taken after analysis has taken place.
The deal was agreed just a few days ago and would have lowered the interest burden on Greece’s debts. However, eurozone representatives were left deeply concerned after the Greek government announced a bonus for pensioners earning below 800 euros a month just three days after the debt deal was signed. The government’s new proposals also seek to exempt residents of Aegean islands from VAT because of an infux of migrants to their shores.
According to eurozone finance ministers, the Greek government’s plan appears not to be in line with agreements. The latest concern is just the latest in a long line of worries about the Greek government not sticking to agreed programmes. The government has already missed a number of objectives and timetables set out. Although, the International Monetary Fund has criticised the targets themselves, saying they aren’t realistic in current financial climates.