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Victoria Mindova

"After meeting Charles Dallara of the Institute of International Finance I am positive about the involvement of banks and the private sector in the foreign debt reducing programme PSI", said the Greek Minister of Finance Evangelos Venizelos at a press conference, despite the already known attitude of local bankers against this programme. Greek bankers refer to the decision of the Summit of 9 December 2011, when European Union leaders officially stated that reducing the nominal value of government bonds held by private investors and funds (PSI) will be applied only in the case of Greece. Their experience shows that such actions do more harm than good and the "voluntary" involvement of the private sector is arm-twisting. From this perspective, if the debt crisis affects other member states of the euro area, PSI will not be applied to them. According to Greek bankers, if Europe has recognized this tactic as wrong, it should not be applied in Greece either.

Reducing the nominal value of the Greek government bonds is seriously breaching the capital adequacy of local banks, which have had no access to the financial market for almost two years now due to the deepening debt crisis in Greece. The gap between banks and the government is deepening and cannot find a common ground, which is proved by the postponing of the deadline for negotiating the programme to reduce the debt from the end of November 2011 to mid-January 2012. According to the Minister of Finance Evangelos Venizelos, the renegotiation of the terms of the new bailout contract must be completed at the same time. It will provide €89 billion by March 2012 to cover basic needs like payment of salaries, pensions and foreign debt obligations. To what extent these deadlines will be met is still unknown.

The Minister of Finance said that preliminary talks are underway on the new financial aid from Europe and all conditions must be determined by mid-January in order not to delay the payment of the first tranche of the new Memorandum. "If anyone thinks that it will be possible to renegotiate the terms after the election, they are wrong," said Venizelos. Thus, he made it clear that the pattern used by the leader of the opposition New Democracy Antonis Samaras that the Memorandum is wrong and must be renegotiated will not apply.

Venizelos refused to directly confirm or deny that the Greeks will have to bear new measures, but said that if the 2011 budget were not met new cuts would come after the New Year. "If there are gaps in the implementation of this year's budget, discrepancies between planned and achieved in 2011, we will see what we will do. This is a serious and very big political issue and all political forces should assume their responsibility. Those who support the government of Lucas Papademos and those who want to govern the country to enable a new way and new perspectives."

With this message, Venizelos made it clear that any new taxes or austerity measures that would be imposed in Greece will not depend on him but on the whole political system that is willing the country to stay within the eurozone. The Minister of Finance stressed that if necessary, the government will not resort to only additional measures related to the revenue (additional taxes or higher tax rates) but it will cut the costs in the public sector. However, he did not deny firmly that taxpayers would not be charged extra. Following the principle of, "after me the flood", Venizelos said, "I do not think it is my duty to engage with such an anticipation of what additional measures should be taken. This will be the responsibility of the next democratically elected government, which will bind the country with the implementation of the recovery programme and which must have the dynamic support of Greek citizens."