No bailout if more austerity measures are demanded, says Stournaras

Greece will not agree to a new bailout if the troika demands more austerity measures as part of the deal, Finance Minister Yannis Stournaras has told Kathimerini.

The Greek finance chief said that negotiations regarding Greece’s fiscal gap, financing shortfall and what form further debt relief might take will continue but he was adamant that Athens would not accept more fiscal measures being added to the agenda.

“We are negotiating hard, as we always do,” he said.

“However, realism and calm has to prevail on all sides. At a time when markets are starting to trust Greece again, illogical demands can only cause damage.”

The spread between Greek 10-year bonds and the benchmark German bund dropped to its lowest level in three years last week, but the Greek government has been alarmed by demands for further cuts and the European Central Bank’s refusal to discuss the option of rolling over Greek bonds to cover the country’s financing gap.

“We will only agree on a new bailout package if it is not accompanied by new measures,” said Stournaras. “We will accept structural measures.”

Greece has already backed down over the size of its primary surplus this year, with the troika rejecting Athens’s requests to include gains made by the Hellenic Financial Stability Fund. It has also been rebuffed by the troika over projections of increased tax revenues next year.

The ECB has refused to budge on the issue of bond rollovers because it considers this “monetary financing” of a member state, which the bank’s charter forbids. The Greek government however believes that the ECB has been more flexible on similar issues in the cases of Ireland and Italy.

“Fiscal and monetary strictness cannot be exhausted in Greece,” said Stournaras.

In the meantime, the government is striving to meet its latest reform targets before the heads of the troika mission in Greece return later this month. They are due to come back on October 28, possibly paving the way for Athens to receive another 1 billion euros in bailout cash.