Gov’t mulling fresh handouts ahead of elections

With an eye on upcoming local and European Parliament elections, along with the looming national elections, the Greek government is reportedly intent on distributing handouts and benefits to the tune of 658 million euros in a bid to bridge the gap in opinion polls with opposition New Democracy.

However, the government’s intentions, which include an Easter handout, have come up against objections from the Finance Ministry, which has earmarked the sum to pay a one-off retroactive benefit to civil servants and public sector pensioners. It insists that the 2019 budget cannot afford handouts as this would derail primary surplus targets.

Greece will have a surplus of 3.3 percent of GDP instead of the 3.6 percent which the government has committed to achieve in 2019.

“We have no intention to spend [the 658 million euros] because it will then count as an expense for 2019 and that will have a negative impact on the fiscal target,” Finance Ministry sources said last week.

Finance Minister Euclid Tsakalotos’s objections to the measure also stem from his intention not to spoil the climate with Greece’s European Union partners ahead of Friday’s Eurogroup, which Greece hopes will approve the disbursal of the first tranche of roughly 1-billion-euros of European Central Bank profit returns on Greek bond holdings.

The European Commission’s enhanced post-bailout report last month noted the danger of Greece deviating from the path to normalcy.

If the government does move ahead with the distribution of handouts, this is expected to draw the ire of the country’s creditors and puncture the narrative that Tsakalotos has painstaking to sought to promote – that Greece is getting back to normal.

Moreover, according to sources, Tsakalotos has committed to the institutions to use the money for retroactive payments to civil servants and pensioners.

In remarks last week, he said that the sum “is credit that was there in case we were unable to pay retroactive [payments] in 2018.”

“As it was not needed, it now remains as credit,” he said, adding that “we have no intention of spending it as then it would count as an expense for 2019 and would have a negative impact on fiscal targets.”