Greece open to compromise to seal deal this week

30 May 2015 | Author: | No comments yet »

Greece Interior Minister Says Government Will Focus on Completing Bailout Deal this Week.

Greece’s economy minister has said the country will avoid a default next Friday, promising to make its latest loan repayment to the International Monetary Fund.The Greek government is apparently coming to terms to secure the much awaited bailout agreement within this week, according to Interior Minister Nikos Voutsis.

Recent statement from Greece Interior Ministrer Nikos Voutsis suggest that the country’s government is making good time as it seeks a quick resolution and a bailout agreement in the coming days. Syriza’s Giorgos Stathakis said the cash-strapped government would pay back €304m on June 5 after weeks of threats that it would default in favour of continuing to pay its public sector workers.

The Greek authorities have been locked at a stalemate with its international lenders (EU and IMF) for months now, mainly due to the cash-strapped country’s arrogance and short-sightedness. Greece has been stalemated with European Union and International Monetary Fund creditors for the past several months, and the stakes are higher than ever as the current bailout program is due to expire in a month from now, on June 30. According to Voutsis, who is not one of the parties in Greece’s negotiations with its creditors, he is confident that the government can come up with a “solution and a deal” within the week. Washington has warned against complacency, saying few expected the scale of the crisis triggered by the bankruptcy of investment bank Lehman Brothers in 2008. “There is a little bit of better sentiment towards Greece after we saw some reports yesterday of a deal”, said Manuel Oliveri, an FX market strategist at Credit Agricole in London. Ordinary Greeks rushed to pull their money out of the country’s banking system, with figures showing private sector bank deposits shrank by €4.6bn in April to €133.6bn, their lowest level since October 2004.

However, the international lenders cite Greece’s reluctance to alter its labor and pension programs as a major reason for withholding further aid. “Some parts of our program could be pushed back by six months or maybe by a year, so that there is some balance,” said Voutsis. Should the government manage to make the latest payment, it would still face another three payments totaling €1.3bn over the course of June 12 to June 19. Greece’s beleaguered banks have lost more than 15pc of their total deposits since December 2014 when snap elections were called to resolve the country’s future in the eurozone.

The global leaders, however were not as confident as Voutsis, as IMF boss Christine Lagarde said, ‘it’s very unlikely that we’ll reach a comprehensive solution in the next days.’ The US issued a warning of a potential accident for the global financial system if Greece and its creditors do not come to an agreement. When he was elected in January, Tsipras aggressively vowed to o away with austerity, launching numerous reforms, such as restoring the previous minimum wage.

However, European Commission spokesperson Annika Breidthardt said that there are several “open issues” that need to be address before an agreement can be reached. The current ruling party, Syriza, came to power in January by promising the Greek electorate a radical shift away from the austerity policies imposed on the country by the European Union.

German Finance Minister Wolfgang Schaueble addresses a news conference at the G7 finance ministers and central bankers meeting in Dresden, Germany, May 29, 2015. But in a reminder of the long-standing divisions among policymakers over the merits of austerity or public spending, United States Treasury Secretary Jack Lew stressed the need for major economies to use a “full toolkit”, including fiscal policies to support growth and avoid deflation. The comments echoed his German counterpart Wolfgang Schaeuble who hinted that Greece would leave the euro without a new deal after the end of next month. Mr Varoufakis also maintained that his government would not impose “permanent recessionary measures”, including VAT hikes, being demanded by its lenders. Following talk from the IMF’s chief economist and Ms Lagarde that the continent could cope with the after-effects of a Grexit, rating’s agency Moody’s warned a Greek departure “would change the face and the nature of monetary union”. “Unless it acts as a catalyst for closer integration, the risk is that the eurozone will come to look like an exchange rate mechanism rather than a currency union.”

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