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Athens wants a solution for the debt by April 2014

20 October 2013 / 23:10:32  GRReporter
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In the most critical phase of negotiations with creditors, Finance Minister Yiannis Stournaras revealed his cards. He ruled out tax increases and new cuts in wages and basic pensions and sent a clear message that raising unreasonable demands is to the advantage of nobody. Stournaras asked Europe for a debt solution, even at an extraordinary meeting of Eurogroup on the day when this year's primary budget surplus is certified in April 2014. The Minister believes that the opinion of some countries, which would like it if no such decision existed before the European elections in May 2014 is unjust. According to him, the government would complete the term of office, and when asked whether he is interested in the political scene, he said that it was too early. He revealed all of this in an interview with journalists Eleftheria Arlapanou and Mara Vourgana for Saturday's issue of Imerisia newspaper.

What do you think will happen when this programme ends: a new loan with a new memorandum, access to markets, or a combination of both?

First, the existing programme still provides money and we believe that it can cover our financial needs for the period 2014 - 2015. Furthermore, our goal is to gradually bring Greece back to markets in 2014.

Don’t you rule out the possibility of a new loan?

For the moment, I do not exclude anything. And nothing should be excluded.

However, will we manage to withstand a third memorandum politically and socially?

This is not a memorandum in the sense that there are no further steps which can be taken. Let me clarify, there are steps which we can take, such as restructuring - for example, the opening of markets and removal of barriers in order to enter various industries. It is not desirable, however, to take additional fiscal measures. Currently, according to estimations by the IMF, the European Central Bank and the European Commission, the cyclically adjusted surplus is between 4 % - 6 % of GDP. Now, if someone asks why it is cyclically adjusted, they should refer to the latest IMF report, which says that this is the criterion that must be borne in mind if a decision is taken as to whether further fiscal measures will be needed.

However, the Troika has reportedly called for additional fiscal measures for 2014; it is also being heard that 2 billion euro would be required, and we are arguing that this amount is less and trying to overcome the difference somehow. Eventually, what steps will you take in 2014?

The last time leaders of the Troika left, there were different opinions on the financial shortfall in 2014. Our argument is that in July they themselves found that there was no budget gap. Since then, things have been going well, and not worse. Some variations in government subsectors exist, such as measures which we have not taken. For example, we could not enforce the payment of 0.2 per thousand of the turnover of companies, and we did not take measures in order to reduce the salaries and pensions of police officers. First, of course, we should rule out any tax increases. But we need to apply targeted cost reductions in the public sector or structural measures. Thus, the draft budget that we submitted also foresees this.

Will further cuts in wages and pensions be avoided?

Yes, we will avoid cutting wages and basic pensions.

But will there be a reduction of additional incomes?

Only what is foreseen in laws that have been adopted and refer to the consolidation of the social security system.

We say that we must find equivalent measures related to the shortage created by our decision. What is its amount?

According to our previous forecasts, the budget gap for 2014 amounts to about 600 to 700 million euro mainly due to untaken measures and variations in government subsectors. But we should not forget that these assessments are made on the basis of data at any particular time. Over time, we have new information and forecasts are updated.

It is heard, however, that the Troika claims that it amounts to at least 2 billion euro?

The Troika claims that the amount is much higher. But in conversations that we had, their arguments were not strong. I want to remind you that every time the Troika comes, it always presents a great fiscal gap, and eventually we find the "golden mean."

But there is a political debate that if the Troika insists on fiscal measures in 2014, we will "respond" at the ballot box. Do you think that such a decision is appropriate at this stage?

We have been negotiating with the Troika for a year and a half. There are always solutions. Therefore, I think that this will happen now. Offering irrational positions now is to nobody’s advantage.

Let’s get back to the issue of the conflict with the Troika.

Let’s not call it a conflict; I prefer the word negotiation... They represent creditors, I represent the Greek government. So far, negotiations are not bad. And I hope that this will continue.

Regarding the rhetoric of Jörg Asmussen, who initially raised the bar of the shortage to 5-6 billion euro in 2014, while the core assessment, as far as I know, is about 4.5 billion euro, and ruled out the option for the conversion of bonds held by the ECB and central banks of the Eurozone (ANFAs) - what do you think this rigid position is due to?

Tags: Yiannis Stournaras Ministry of Finance debt Eurogroup Troika
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