Greek PM resolute over austerity despite deadline looming over IMF payment
Our Government cannot — and will not — accept a cure that has proven itself over five long years to be worse than the disease.
Greek officials will use today to revive their bid to access financial aid with their Finance Minister, Yanis Varoufakis, blaming creditors’ insistence on more austerity for the impasse.
While Greek Prime Minister Alexis Tsipras’ spokesman Gabriel Sakellaridis yesterday said a deal could be reached by the end of May, he admitted that disagreements remained in areas such as budget targets, sales-tax rates, pension and labour market rules.
“Our creditors’ insistence on greater austerity is subtle yet steadfast,” Varoufakis wrote in a Project Syndicate opinion piece.
“Our Government cannot — and will not — accept a cure that has proven itself over five long years to be worse than the disease.”
The standoff with lenders has seen liquidity evaporate in Greece, pushing the economy back into recession. Record deposit withdrawals and the state’s increasing difficulty in meeting debt payments have renewed doubts about the country’s ability to stay in the euro.
Greek shares yesterday fell the most in almost three weeks, with the benchmark Athens Stock Exchange losing 3.1 per cent.
The gauge has fallen over 32 per cent in the past 12 months, making it one of the worst-performing major equity indexes tracked by Bloomberg. Greek bonds have delivered the worst returns of all sovereign securities tracked by Bloomberg’s World Bond Indexes in the past year.
Yet with just over five weeks before the eurozone’s offer of financial aid expires, Tsipras remains defiant. Greece would not take measures that deepened the country’s recession further, the Prime Minister said at the weekend.
Even though no aid disbursements have been made since the last northern summer, Greece has managed to meet external payments by slowing down spending, building up arrears to suppliers and vendors, encouraging citizens to pay overdue taxes, and seizing the cash reserves of regional governments, hospitals, universities, and other public entities.
Those buffers are being depleted, though, and Sakellaridis declined to say yesterday whether Greece can meet payments to the International Monetary Fund in June totalling almost 1.6 billion ($2.4 billion).
“We don’t impose deadlines, blackmails or ultimatums,” he said.
“There is, however, an absolute need to reach an agreement due to liquidity problems.”
IMF chief economist Olivier Blanchard said in an interview with Les Echos newspaper that Greece’s pension system was “often too generous” and there were “still too many civil servants”. Greece was still “quite a long way” from the credible measures required to transform its “substantial budget deficit” into a surplus, Blanchard said.