The Greek government has had to renege on its plan to give the poorest pensioners a one-off bonus over Christmas as the EU refused to lend support after the announcement. Eurozone finance ministers had planned on continuing their bailout support to Greece, but decided to withhold it after the Greek prime minister announced a few days later he was going to divert a large sum towards pensioners. Prime Minister Alexis Tsipras had announced that his government would be handing out €617 million to the lowest earning pensioners from the EU package, after revealing the country had exceeded its 2016 primary surplus budget. The European Stability Mechanism (ESM) was quick to denounce its support, stating it would review the arrangement to prevent misuse of the funds. Furthermore, Greece also plans to continue its 30 percent discount on value-added tax on some of its islands. The third bailout was scheduled to be released following Greece’s compliance with austerity measures set by the ESM.
“Following recent proposals by the Greek government to spend additional fiscal resources for pensions and VAT our governing bodies have put their decisions temporarily on hold,” a spokesman for the ESM said.
“Institutions are currently assessing the impact of Greek government decisions vis-a-vis the ESM program commitments and targets. (We) will then analyse the institutions’ assessment and subsequently decide how to proceed,” the spokesman continued. The news sent Greek government bonds up, with the 10-year yield going up to 7.3 percent. Despite the rebuttal, Tsipras plans a parliamentary vote to gain local support for the pensioners. The government is also hoping that a meeting with German Chancellor Angela Merkel, will prove decisive in its favour. Voicing his disappointment with the EU’s decision, Tsipras said “When we exceed targets and revenue by sticking to the program, we will not seek anyone’s permission to give this money to those who need it most.”