Cautious optimism over loan deal

The government attempted yesterday to play down the European Union’s decision to examine the possibility of giving Greece longer to repay the 110 billion euros it is borrowing as part of an emergency loan package, fearing that it could lead to ministers, public servants and the public believing that the country is out of the woods. Finance Minister Giorgos Papaconstantinou said yesterday that the EU’s decision to think about extending the repayment period for Greece’s loans from three years to seven-and-a-half was a «very significant addition that allows more time.» Such a move would bring Greece’s loan package in line with the one agreed upon for Ireland by EU finance ministers on Sunday and would mean Athens repaying the last of its loan installments in 2024. «We hope that the extension will be in effect from when we get the next loan installment in March, which is 15 billion euros,» Papaconstantinou told journalists. However, the finance minister was quick to warn that things would not get easier, drawing attention to the fact that even after the EU-IMF memorandum has run its course in 2013, Greece will still have to meet specific fiscal targets. «It is clear that after the end of the memorandum, the commitments we have to the single currency [euro] will not disappear,» he said. «The country will find itself in the new stricter structure of the EU.» Government spokesman Giorgos Petalotis echoed Papaconstantinou’s cautious approach. «The all-clear has not sounded,» he said. «We should not fool ourselves.» The government fears that the news of a possible longer repayment period coming as it embarks on a tough program of cost-cutting and public sector reforms could be enough to derail the process as ministers will take it as a sign that the pressure is off. There is also concern that the idea of Greece being under less financial pressure to repay its loans could be fodder for unions – such as the Panhellenic Seamen’s Federation (PNO), which is entering its second week of strike action – which will argue that there is no longer the need for austerity measures to be as tough as they have been over the last few months.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.