Bank of Greece Governor Yannis Stournaras’s support of the idea that the country should be inducted into a “precautionary support framework” after its bailout expires in 2018 in order to boost investor confidence and lower borrowing costs prompted a fierce response on Thursday from the government, which has pledged a “clean exit” and a return to markets after eight years of financial handouts.
Provoking yet another round of acrimony with the former finance minister of the previous conservative-led administration, the government described him on Thursday as “a failed minister.”
“Just because a failed finance minister from a failed government had favored a credit line instead of a return to markets does not mean that a successful government can’t do things better,” the government said Thursday in a non-paper.
In a message on Facebook, Health Minister Pavlos Polakis urged Stournaras to step down. “Failed former [minister], resign… The bailouts are coming to an end, stop dreaming of a new one,” he said.
In a scheduled report on monetary policy Thursday, the central bank said that a contingency credit plan could effectively support the country’s economy.
“It is important to consolidate confidence over the medium term and it is equally important to… clarify the form that post-program support to the Greek economy will take.”
The government’s aggressive stance toward Stournaras has been consistent since the leftist-led SYRIZA government came to power.
Stournaras, however, enjoys the support of the European Central Bank as comments by its president, Mario Draghi, in the European Parliament last month suggested.
Draghi described Stournaras as a trusted member of the ECB’s board who has worked very hard for the benefit of Greece.
Stournaras justified his support for a precautionary credit line citing ECB rules, which, analysts say, could mean he had prior consultation with Frankfurt.
It is worth noting that Draghi hinted last week at a possible fourth bailout program. He said that the need for a program, or not, will depend on Greece, to the chagrin of Prime Minister Alexis Tsipras.
Stournaras also said Thursday that in the event that the country’s credit rating does not improve by the time the current bailout expires then Greek bonds will be adversely impacted.
The report also said that it was imperative for Greece to continue implementing reforms mandated under its bailout.