‘There’s no Plan B’ says Greek FinMin

Greek Finance Minister Yannis Stournaras on Monday said that Greece has “no Plan B,” playing down concerns regarding further debt restructuring and expressing confidence that the crisis-hit country will achieve a primary surplus by the end of this year.

Speaking from Athens with Francine Lacqua and Guy Johnson on Bloomberg Television’s “The Pulse,” the Greek finance chief appeared upbeat that Greece will achieve a primary surplus this year and return to growth in 2014, saying that “the fiscal situation has already improved tremendously.”

Asked about recent concerns voiced by the International Monetary Fund of an 11-billion-euro shortfall appearing in the 2014-2016 period, Stournaras said that “this is not our greatest concern. It is a small amount of money. Greece is covered up to 2014.”

Greece is in the sixth year of a recession deepened by spending cuts and tax increases linked to a 240-billion-euro ($319 billion) bailout from the euro area and the IMF. The unemployment rate reached a record 27.4 percent in the first quarter. Joblessness has more than doubled since bailout funds started flowing in May 2010.

IMF staff said in a report recently that Greece will probably need more money and debt relief to meet the aid program’s targets. The fund’s staff said 4.4 billion euros of financing has yet to be identified next year under the rescue package.

Stournaras brushed aside concerns that the IMF may pull out of the Greek rescue program if a funding gap that IMF inspectors believe will open in August 2014 is not filled, saying “the IMF will stay in – this is the understanding.”

“The greatest concern is to produce a primary surplus this year and to come back to a positive growth rate next year,” Stournaras said. “These are the catalysts to finding solutions to the remaining problems.”

Stournaras also played down German reactions ahead of federal elections in the autumn to the possibility of a further writedown of Greek debt, saying that “the German election is not our concern either.”

“There’s no Plan B,” Greece’s finance chief said. “Everything has been agreed in the Eurogroup. All the necessary ingredients are there, we have a very good working relationship with the troika… I do not envisage any problems at the moment… If and when Greece produces a primary surplus, the Eurogroup will take appropriate means to reduce the debt even further if this is needed.”

Asked how Greece’s coalition government would withstand the need for further austerity measures “if the numbers don’t add up,” Stournaras said that the “government has a comfortable majority.”

He added, however, that “further austerity is not the solution to the problem. The problem is to combine further fiscal adjustment with growth.”

“We are trying to improve the tax collection mechanisms and to complete the remaining structural reforms. In terms of fiscal adjustment we have covered two-thirds of the distance,” Stournaras said. “The main concern is to implement what needs to be done… to continue on the road we have designed.”

Stournaras was also upbeat about Greece’s privatization program, saying that the the targets for 2013 and 2014 “will be met,” though conceding a delay in the sale of the public gas company DEPA. [Bloomberg/Kathimerini English Edition]