Bank of Greece chief warns of pension drag on state budget
Bank of Greece Governor Yannis Stournaras on Tuesday sounded the alarm over the cost of social security, warning that the margins are “extremely narrow” for pensions to continue being paid out of the state budget.
Speaking at a conference on private health insurance, the former finance minister warned of the challenges of an aging population and said that “poor implementation or backtracking on reforms have increased demands on public pension funds and resulted in higher pension costs.”
He also expressed concern about a series of rulings from the Council of State finding that certain categories of pension cuts imposed in previous years as part of creditor-mandated austerity measures, were in violation of the Greek Constitution, saying that they could “further increase pension spending, possibly with retroactive effect.”
“The Bank of Greece estimates that these factors, in combination, pose the most serious medium-term fiscal risk and have an adverse effect on the debt sustainability analysis,” Stournaras warned.
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