EU's Dombrovskis says Greek pension payout 'complicated' review talks

ATHENS Greece’s decision to give pensioners a one-off bonus has delayed the conclusion of its second bailout review but an agreement can still be reached in the coming months, EU Commission Vice-President Valdis Dombrovskis was quoted as saying on Saturday.

Greece angered its lenders this month by announcing it would spend about 600 million euros on a Christmas bonus for low income pensioners after beating its fiscal targets for the year.

The ESM, the euro zone’s bailout fund, said Athens should have consulted its creditors first and froze a short-term debt relief deal reached earlier this month.

“Certainly I wouldn’t describe the situation as a ‘dead-end’ but more turbulent than a few weeks ago,” Dombrovskis said in an interview with Greek newspaper Kathimerini. An agreement could be reached “in the coming months” if all sides acted “constructively”, he said.

“What complicated things is the unilateral announcement by the Greek government over the benefits for 2016-17, even though we understand the concerns and the purpose behind this move by the Greek government,” Dombrovskis said.

Greece has said it hopes to conclude its second review by early January at the latest but it remains at odds with its European and International Monetary Fund lenders over fiscal targets and labor and energy reforms.

Dombrovskis said the “distance was not so big as not to be bridged.”

Greece wants to be included in the European Central Bank’s quantitative easing program in the first quarter of next year and to regain market access by the end of 2017.

(Reporting by Karolina Tagaris; Editing by Catherine Evans)