Greece does not require a third bailout and can cover its needs without further burdening its current backers, by improving the terms of its debt and possibly returning to the bond market next year, the country’s deputy prime minister said on Wednesday.
Evangelos Venizelos, who is also foreign minister in a coalition government, is determined not to impose losses on Greece’s European Union partners and the International Monetary Fund, which have pulled the troubled country from the brink of bankruptcy with about 240 billion euros ($325 billion) so far.
“We understand very, very well how difficult it is for every government to accept debt relief. … Our demand is not debt relief. It is additional reprofiling without problem, without additional burden for our institutional partners,” Venizelos said in an interview with top editors at Reuters in New York.
His comments came days after elections in Germany, whose support to Greece came in exchange for waves of austerity measures that have created political and social turmoil across the Mediterranean nation.
The Greek debt crisis shook the eurozone and global financial markets and plunged the country into a recession, now in its sixth year. Unemployment hovers near 28 percent nationally and at about 60 percent for young adults.
“We are talking about the potential for a lost generation here,” Venizelos said, adding that the prospect of a social explosion if Greek citizens are forced to endure more fiscal austerity was the biggest risk for the country.
“It is not possible to implement new fiscal measures. It is not possible to impose new cuts on wages and pensions,” he said.
He said the rise of the far-right Golden Dawn party, which last year entered the 300-seat parliament for the first time, and won 18 seats in June elections, was a product of the crisis.
Since the sovereign debt crisis of 2009, Greece has been shut out of international capital markets, resorting only to short-term borrowings, and has relied on two bailouts and a major writedown of Greek debt held by private investors.
Despite punishing fiscal measures and cash injections, it is expected to need an additional 10 billion to 12 billion euros in the next two years. The eurozone is likely to decide on a third bailout for Greece in November after international inspectors finish an assessment of its reforms.
Venizelos, a constitutional law professor and former finance minister who negotiated the debt writedown, said Greece was not looking for any more handouts but could cover its needs by returning to the bond market as early as next year and by renegotiating the interest and maturity of existing debt.
“Our point is not to transform the adjustment program as a more loose program, but to implement through a clever manner the existing program,» he said.
Venizelos said Greece’s 330 billion euros of public debt was modest when compared with the multi-trillions of euros held by Germany, Italy and France, but that precludes the size of the overall economy, which is now one of the smallest in the EU.
Greeks often blame Germany for the tough austerity measures imposed on the country as a condition for the two prior bailouts, which have led to the economy shrinking by almost a quarter since 2008.
German Chancellor Angela Merkel’s landslide victory came with the rise of a more euroskeptic political movement that is hostile to euro zone bailouts.
But Venizelos said now that the elections were out of the way in Germany, there was the opportunity to talk strategically about Europe’s future, and what he deemed the «re-evaluation and the reassessment of our common European destiny.” [Reuters]