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Anastasia Balezdrova

Bulgaria’s former Deputy Prime Minister and Minister of Finance Simeon Djankov visited Athens to take part in the Emergency Economic Summit for Greece organized by organizations that support the freedom of individuals and markets.

In his speech to the participants, he presented his advice on how Greece could fight corruption, which is one of the main restraints on its economic development. Shortly before stepping on the podium, the former Deputy Prime Minister and Minister answered GRReporter's questions about the negotiations with Greece’s creditors, the tactics of SYRIZA cabinet and the consequences of a possible exit from the euro zone.

Mr. Djankov, is there a chance for Greece to repay its debt, even if it attained the budget surpluses set in the Memorandum of financial aid?

It is unlikely at this stage because most of the reforms have slowed down both before this government and during its term. Therefore, the entire programme of Greece’s economic development needs to be fully revised. I think that the plans for debt repayment need some changes too, perhaps for them to be extended for a longer period, for example for 40-50 years.
But the main thing is to see in the short run whether this government intends to pay the debt. Long-term solutions can be found.

Do you think there will be a third bailout programme to Greece?

At present, the European Central Bank and the euro zone are not ready for a third bailout package, simply because the second is not fulfilled. They are already tired of successive packages because the first one was not implemented either.

Moreover, they make a comparison with what is happening in other countries with such packages and see that implementing them in difficult situations is possible. Currently, Spain is the best example but Portugal and Ireland are managing in the same way.

Therefore, neither Brussels nor Frankfurt is ready to prepare a third package before this government shows serious commitment to reforms, at least in some sectors. So far, there is no such desire.

Is there a chance for the Greek government and creditors to come to an agreement?

Yes, there is a chance. All want an agreement to be reached. Only that this government has lost weeks arguing about things that I think will happen anyway. I think it has already realized how detrimental the failure to come to agreement is for it. Now there is an internal problem, namely how to present the acceptance of agreement not as a political loss. I think it is a matter of communication.

However, this government will not last long without an agreement, regardless of what it will do afterwards. Those who are in power need an agreement too.

Do you think they would be able to implement it?

They would hardly be able to implement it in full. There would be some delays and slow downs, but there would be at least some signs to the partners, the European Commission and the European Central Bank, that the government is serious because so far, it has demonstrated a lack of seriousness and excessive aggressiveness towards the partners, thanks to which Greece has not yet defaulted.

This behaviour obviously would not disappear but if this aggressiveness were at least reduced and turned into constructiveness, things could happen very fast.

Do you see all this happening, in view of the rhetoric of the government?

I am very familiar with it. It is really very far from reaching an agreement, but Europe and other countries have significant experience in terms of what happens when a state goes bankrupt.

The idea is that regardless of how populist this government is, it will be able to stay in power for a long time, having signed an agreement. I just cannot imagine that intelligent people, although without special knowledge of economics, may think that. The fall of this government will be a matter of weeks in this case. We have seen it in many other countries. In the event of bankruptcy, the currency will depreciate so much that the people who support this government will understand in a couple of weeks how devastating it is.

What would be the consequences of a Grexit for Greece?

The currency would depreciate by over 50% literally in a couple of days, thus collapsing the banking sector that has already stabilized and strengthened to some extent at least. This would cause problems in the payment system – pensions, salaries and other payments would just stop for a while, as had happened in other countries. That is why I think that if this government has a clear judgment, not economical but political, it just needs to see what had happened in other countries. The population turns against the government a few days after the people stop receiving salaries and pensions. I think they know this very well and they are sufficiently advised, both formally and informally, to avoid it.

What would be the consequences of a possible Grexit for Bulgaria?