The first post-review hurdle faced by the government, and specifically the labor ministry, will be to cover a 120-million-euro gap for 2016 that was originally expected to be filled through a retroactive return of a monthly pension bonus (EKAS) allocated to low-income social security beneficiaries.
By S. Papapetros
The first post-review hurdle faced by the government, and specifically the labor ministry, will be to cover a 120-million-euro gap for 2016 that was originally expected to be filled through a retroactive return of a monthly pension bonus (EKAS) allocated to low-income social security beneficiaries.
Following an agreement with institutional creditors on Tuesday to conclude a first review of the Greek program (third bailout) , the Greek government said it would not deduct the bonus paid from the beginning of the year to some 80,000 beneficiaries.
The benefit itself will be eliminated as part of a pension reform bill passed this month to reduce state outlays to the social security system as a percentage of the annual budget and GDP, and to meet memorandum-mandated fiscal targets through 2018.
The 120-million-euro “hole” for 2016 has already come under the scrutiny of creditors, even after the Eurozone finance ministers approved the review, along with the other lenders: ECB, ESM and IMF.
A General Accounting Office report attached to the ratified pension reform bill noted that the gradual elimination of the bonus means that related would decrease by 168 million euros in 2016; 400 million in 2017; 234 million in 2018 and 50 million euros in 2019.
The quandary now faced by the ministry is to cover the “gap” while at the same time allowing low-income pensioners to keep the bonus they received for the first six months of 2016, something that Greek Prime Minister Alexis Tsipras promised from Parliament’s podium.
Nevertheless, a recent amendment tabled by the ministry calls for a retroactive return of the six-month EKAS payments via a withholding on the primary pensions, spread over the next 12 months.