Irish model inspires Samaras as Stournaras eyes primary surplus, more debt relief

Prime Minister Antonis Samaras said on Thursday that he sees Ireland as the “successful example” Greece should follow to overcome the crisis as he held talks in Athens with his Irish counterpart Enda Kenny.

As the two men were meeting at the premier’s office and then viewing exhibits at the Acropolis Museum, Finance Minister Yannis Stournaras said Greece’s goal must be to produce a primary surplus, which would force the eurozone to live up to its commitment to reduce the country’s public debt further.

Samaras praised the way fellow conservative Kenny, and his government, had tackled Ireland’s difficulties through a “wave of reforms.” He said that Ireland’s recipe of low taxes and an export-oriented economy were models that he would like to copy in Greece.

“Even after some problems on international markets led to Ireland finding itself in a serious crisis, its competitiveness and its outward-looking nature soon led it out of the crisis,” he said. “Ireland also made another major choice many years ago: To have low rates of taxation. We will follow this example as well as soon as we start coming out of the crisis.”

Samaras repeated his long-standing commitment to lowering corporate tax to a flat rate of 15 percent and said he was hopeful the troika would accept Greece’s request for value-added tax in the food service sector to come down from 23 percent to 13.

The prime minister also pledged to follow Ireland’s lead when Greece takes up the six-month rotating EU presidency at the beginning of next year. Ireland holds the presidency until next month and Samaras said he would also like to focus, as Dublin has done since January, on the issue of job creation and how EU funds could be used in this direction.

Samaras received encouragement from Kenny, who endorsed the coalition government’s strategy of working with the troika and regaining the trust of Greece’s eurozone partners.

“I think it is fair to say that your prime minister has changed the perception of Greece internationally and has brought a sense of stability and trust to Greek politics,” he said.

Speaking at a Bank of Greece conference on the crisis, Stournaras said that Greece’s immediate target must be to turn its shrinking budget deficit into surplus. “The main target today is to achieve a primary surplus, which will trigger the clause agreed at November’s Eurogroup for the drastic reduction of our public debt,” he said. “This will strengthen the positive climate and help us exit the crisis.”

Stournaras’s comments came in the wake of Kathimerini publishing an interview with Eurogroup head Jeroen Dijsselbloem in which the Dutch finance minister said that the decision on a Greek debt reduction would likely take place next summer, along with a verdict on whether Athens could pass the 50 billion euros it has borrowed to recapitalize its banks to the European Stability Mechanism rather than record it as public debt.

The International Monetary Fund, however, clarified that its loans to Greece would not suffer any haircut. “Our projections show that further debt relief will be needed for Europe to meet its commitment to reduce Greek debt significantly to the program level,” said IMF spokesman Gerry Rice, adding that the Fund’s status as preferred creditor, meaning its loans have to be repaid in full, “is not under discussion in Greece or anywhere else.”