Greece Bailout: Central Bank Shows Support to Implement Pension System Reform
Greece's central bank encourages the government to conform with the bailout reforms proposed by international creditors. On July 2015, creditors have agreed to provide 86 billion euro ($93.4 billion) bailout to help the country's economy amid debt and financial crisis. One crucial reform to carry out in order to receive the bailout is the controversial pension refoms. This reform will be one of the main aspects being examined in the bailout program's first review with international creditors.
The leftist government of Greece is determined to reform pension system to follow agreements with creditors, amid protests from the opposition. Despite all the controversy, support came from Bank of Greece's Governor, Yannis Stournaras in an article he wrote for one of Greece's main newspaper, Kathimerini.
He wrote that if Greece fail to pass the first review by creditors, it could trigger an instability that Greece most likely could not handle. On the other hand, satisfying the requirements to receive bailout would be Greece's chance to recover the country's ailing economy.
In addition to pension system reform, Yannis Stournaras also encouraged the government to approve tax system reform as part of the creditor's prerequisite condition for bailout. The central bank's governor also stated that fulfilling the first review is crucial as it provides a way to lighten Greece's financial burden.
According to Reuters, Greece already compose a draft of proposal to revise their flawed pension system. The proposal stated that the six different pension funds will be merged into just one, followed by up to 30 percent cut of future main pension funds. By the end of the month, this proposal will be presented to the parliament to be voted in February.
The significance of accomplishing these reforms doesn't only lay on the bail cash to be provided by international creditors. The European Central Bank (ECB) has also agreed to give financial aid, with Greek government paper as collateral. Once the bailout reforms are approved by the Greek Parliament and furthermore implemented, euro zone will be able to consider further plans to help ease the country's burden of debt and financial crisis, Dutch Finance Minister, Jeroen Dijsselbloem told Bloomberg.
Greece Prime Minister Alexis Tsipras emphasized the importance of sticking to the bailout reforms deal made with international creditors. Tsipras is also confident that at least his ruling coalition's 153 deputies among the 300-set parliament will vote in the pension system reform's favor. The vote's outcome will be a key aspect in determining the review result, and also whether Greece will receive the bailout cash.