Greece presses case to change bailout terms
Greece’s new government took up the task on Thursday of persuading skeptical lenders visiting Athens to ease the punishing terms of the bailout saving the debt-laden country from bankruptcy.
Just hours after being sworn in, Finance Minister Yannis Stournaras was due to meet senior officials from Greece’s trio of international lenders – the European Union, European Central Bank and International Monetary Fund.
The so-called ‘troika’ is in Athens to review Greece’s faltering progress on fiscal adjustment and reforms under a 130 billion euro bailout package.
Trying to take advantage of a shift in Europe towards more growth-oriented economic policy measures, Greece’s coalition government wants to soften the conditions attached to the bailout – withering tax hikes, job losses and wage cuts that have deepened a recession now into its fifth year.
It faces huge public pressure following a re-run election on June 17 that saw the radical leftist Syriza bloc surge into second place on a promise to tear up the bailout terms, raising the prospect of a catastrophic Greek exit from Europe’s single currency.
But the three-party coalition government led by Conservative Antonis Samaras faces stiff resistance from European partners, notably paymaster Germany, who say that while they are open to adjusting the program, they will not change the targets.
In Stockholm, Swedish Finance Minister Anders Borg said on Swedish Radio on Thursday there was a major risk would fail to fulfill its obligations to its lenders and end up in «some sort of default».
Greece will run out of cash within weeks if it fails to secure the next 31.5 billion-euro installment of bailout funds.
Troika mission chiefs were to hold an initial round of meetings with the government.
They are expected to leave at the end of the week but technical staff, who have already started work, will remain to review Greece’s compliance with the terms of the bailout.
The mission chiefs are expected to return later in July. Only then will lenders decide how to adjust the program to take account of weeks of political paralysis during two elections in May and June and a deeper than expected recession.
The government says it wants tax cuts, a freeze on public sector layoffs, extra help for the poor and unemployed and an additional two years to cut its deficit.
If implemented in full, that program would undo many austerity measures the country agreed to earlier this year to clinch its second bailout since 2010.
It is offering in exchange to expand and speed up the privatization process.
Stournaras, a liberal economist who helped negotiate Greece’s entry into the euro in 2001, took on the job after Samaras’s first choice, banker Vassilis Rapanos, withdrew citing ill health.
Stournaras was sworn in by robed priests on Thursday morning,
Prime Minister Samaras will present his government’s policy at the start of a three-day parliamentary debate on Friday. A vote of confidence on the coalition is scheduled to take place late on Sunday.
[Reuters]
