By Lefteris Papadimas
ATHENS (Reuters) – When asked what he thought about the prospect of yet more austerity to be imposed on Greece by its international creditors, Nicos Papapetrou was fairly short.
“I had better stop … because I will start swearing,” 49-year old Papapetrou, a shop assistant in Athens said.
Greeks appeared resigned on Tuesday to accepting further budget cuts and tax rises after their government agreed to a last-minute compromise of new reforms to keep bailout funds flowing.
Athens and its creditors – the euro zone and International Monetary Fund – agreed on Monday to resume talks on the long-stalled bailout review, but only after Greece agreed to examine what it described as “fiscally neutral” reforms from 2019 onwards.
That, local media have speculated, will mean a drop in the income tax threshold and further pension reform, in exchange for lower VAT rates on essential items and reduce annual tax rates on real estate.
“It’s a left wing government and they are bringing new cutbacks to pensioners and will tax the poorest. They should be ashamed of themselves,” Papapetrou said.
Lenders have sought further reforms to pensions and tax credits, arguing that a present system is based on a relatively small number of taxpayers supporting a large contingent of pensioners.
The Greek government has responded that it needs not only money but some form of debt restructuring.
But ordinary Greeks, who have seen a quarter of their national output wiped out by austerity attached to bailout deals since 2010 with many living off pensions because of high unemployment, take a dim view.
“People simply don’t have the money, people cannot afford new measures. They don’t have enough to feed themselves,” said Spiridoula Gempanoglu, 47, who works at a butchers in central Athens.
“We used to have queues in this shop. Now we have a client an hour at best who buys a couple of pieces of chicken,” she said.
Nearly seven years of austerity have led to a spike in poverty levels, and the highest poverty rate increase in the European Union. Eurostat data from 2015 showed 22.2 percent of Greece’s 11 million population were “severely materially deprived”.
Greek also has the highest unemployment rate in the EU – at 23 percent – and has just seen its economy contract again after being in deep recession since around 2009.
Prime Minister Alexis Tsipras, whose leftist-led government is lagging in opinion polls, has frequently said Greeks cannot take more austerity.
But it appeared on Tuesday as if he had had to cave in.
Yanis Varoufakis, who served as finance minister under Tsipras’s administration prior to accepting the nation’s third bailout in mid-2015, was scathing of the deal.
“Lenders once again imposed on Athens insincere and unattainable targets. Congratulations!” he said in a twitter feed.
The conservative opposition New Democracy, which has a double-digit lead in opinion polls, said the government was trying to mask its complete retreat in a bid to get the bailout inspectors back to Athens.
“What’s certain is that the government will slap on more taxes by lowering the income tax exemption and will further cut pensions,” former conservative Deputy Finance Minister Christos Satikouras said in a statement.
“While it was saying it would not yield to the IMF’s demands, today it is accepting them … trapping the country in austerity policies for many more years.”
(Writing By Michele Kambas Editing by Jeremy Gaunt)