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As far as I'm aware it wasn't so much the ECB that were worried about the debt sustainability of the latest greek proposals as the IMF, who felt that more of th
by raesene9 11y ago
As far as I'm aware it wasn't so much the ECB that were worried about the debt sustainability of the latest greek proposals as the IMF, who felt that more of the gap should be filled with cuts to benefits as opposed to increases in taxes.
The problem with not "caving in" to the demands of their creditors is that if Greece defaults, it's likely to have serious consequences for the affordability of their pension arangements. Whether those are more, or less, serious than the consequences of acceding to the requirements of their creditors is unknown.
- MisterWebz 11y ago...more of the gap should be filled with cuts to benefits as opposed to increases in taxes. What's their reasoning behind this?
- raesene9 11y agoMy understanding (which is purely derived from reading news sites FWIW) is that IMF view heavy tax increases as likely to reduce economic activity in Greece (i.e. companies will go elsewhere to do business) and that this would have a bad effect on tax receipts, so would be in essence, self-defeating...
- smitherfield 11y agoBecause tax evasion is so rampant in Greece, the IMF reasons (correctly) that tax increases wouldn't raise anywhere remotely as much revenue as Syriza claims they would.
- bjourne 11y agoNo, it was the ECB that decided not to extend Greece's credit because the government didn't implement the cuts they demanded. Maybe their government will lead them into ruin or maybe it will not. But it was democratically elected and has strong popular support. It's not the job of the ECB to bully other countries into doing what they think is best.
- raesene9 11y agoIt is not my understanding (and I'd be interested to see where you get that from) that the ECB is the one demanding cuts. The EU and the IMF are the one's proposing the package, not the ECB.