- Move could ease payout of next emergency loan to Greece
- Reforms are key in talks between IMF, European institutions
Germany is opening the door to a fix for Greece’s latest budget crisis as Chancellor Angela Merkel tries to help the country cope with the burdens of Europe’s refugee influx.
Germany is willing to grant Greece leeway in the country’s overhaul of its pension system, a person familiar with the German government’s position said, signaling flexibility on a contentious dispute between Greece and its creditors.
While previously demanding pension cuts, Germany would now be satisfied with a combination of measures that ensures the pension system’s sustainability amid a review of Greece’s progress on meeting its bailout terms, according to the person, who asked not to be identified because the talks are private.
The International Monetary Fund says the pension system is unsustainable and benefit cuts are needed. In contrast, German Finance Ministry spokesman Martin Jaeger said Monday that his country won’t stand in the way of any “sensible solution” that ensures a sustainable Greek budget.
While Prime Minister Alexis Tsipras’s government acknowledges that the system isn’t sustainable, it has proposed alternatives including an increase in mandatory contributions by white-collar workers, employers and farmers. Those plans have led to protests by the groups being asked to pay more.
The IMF is assessing Greece’s third aid program alongside the European Central Bank and the European Commission. One of Germany’s key demands is that the fund eventually participate financially in the bailout.
Merkel’s government says there’s no link between Greece’s bailout and helping Tsipras stem the refugee influx. Still, any easing of the requirements would be a help. With nations along the so-called Balkans route blocking refugees from heading north from Greece, Merkel warned on Sunday against allowing “chaos” to develop in a country that already “has many problems.”
“The financial situation is difficult,” Schaeuble said during a Group of 20 meeting of finance officials in Shanghai on Saturday. “Greece is in the situation that it is receiving a lot of solidarity from Germany but not from all the others.”