Greece open to compromise to seal deal this week: interior minister

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.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.

ATHENS, May 30 — Greece’s government is confident of reaching a deal with its creditors this week and is open to pushing back parts of its anti-austerity programme to make that happen, the country’s interior minister said today.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.

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. Greece and its EU/IMF creditors have been locked in talks for months on a cash-for-reforms deal and pressure is growing for a deal, since Athens risks default without aid from a bailout programme that expires on June 30. “We believe that we can and we must have a solution and a deal within the week,” Interior Minister Nikos Voutsis, who is not involved in Greece’s talks with the lenders, told Skai television.

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. He did not elaborate on what parts of the ruling Syriza party’s anti-austerity programme could be pushed back, but the comments suggested a greater willingness to compromise on pre-election pledges. 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. Prime Minister Alexis Tsipras stormed to power in January on promises to cancel austerity, including restoring the minimum wage level and collective bargaining rights.

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. 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. 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 they still disagreed on a sales tax, with Greece pushing so any VAT hikes will not burden lower incomes. “A powerful majority in the political negotiations has showed respect for the fact that there can’t be further austerity strategies for the Greek issue, the Greek problem and the Greek people,” he said. 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. Stathakis was confident a deal will be reached. “Otherwise, mainly Greece but the European Union as well will step into unchartered waters and no-one wants that.” — Reuters

The comments echoed his German counterpart Wolfgang Schaeuble who hinted that Greece would leave the euro without an 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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