The Greek Finance Minister Euclid Tsakalotos did not hold back his anger during his speech at the Economist conference titled “A Glimpse into the European Financial Landscape-Greece: A Return to the Financial Markets?”, in Frankfurt.
Euclid Tsakalotos called for a clear solution to the debt issue by holding both the IMF and the institutions responsible for the delay in closing the evaluation. Tsakalotos’ arguing and rhetorical ability in English made Benoît Coeuré unable to rebut the arguments of the Greek Finance Minister, causing his embarrassment, which was also perceived by the audience.
Following the session, Tsakalotos and Coeuré had a meeting with Declan Costello at the Steigenberger Frankfurter Hof hotel. They later left for the ECB where Tsakalotos met with Draghi.
“It seems there’s wide agreement that Greece has met its commitments concerning reforms,” Tsakalotos said adding most sides are amazed by the degree to which the country has kept these commitments, as well as the range and depth of the reforms.
“After such an effort, what the Greek government is asking is clarity on the debt issue. And this was not achieved at the Eurogroup table on May 22. Clarity is very important; it is important for the Greek people, as after many years (…) there’s a prospect for a new start. It is also very important for investors. Investors need to know in which way Greece will be able to meet its borrowing obligations in the short and long term. So it is absolutely crucial for growth to have clarity. That is what we are calling for at the Eurogroup meeting in June,” he added.
Tsakalotos also spoke about the stance of the International Monetary Fund (IMF), noting that the Greek government is asking for clarity and that in the last Eurogroup it claimed that the measures taken, or which will be taken on debt relief are not enough for make it sustainable.
“The IMF promised to participate in the program on August 2015. It’s been two years since then. We’ve only got 14 months of a program to go. It seems to me that it’s time for the IMF to make up its mind on what it wants to do and what it thinks needs to be done,” the minister said.
He continued noting that Germany and the Netherlands have indicated they will refuse to lend more money to Greece without the IMF’s participation.
“Either because they believed that this would ensure a stricter program or because they believed that European institutions lacked the know-how. If so, then the IMF cannot be good for structural reforms and advice on structural reforms (…) but not have an opinion on the debt relief needed,” he explained, adding the two countries must find a compromise with the IMF on debt sustainability.
Coeuré: Uncertainty over the sustainability of Greek debt must be lifted
Benoît Coeuré, member of the Executive Committee of the European Central Bank (ECB), stressed the need to lift the uncertainty over the sustainability of the Greek debt in order to restore the confidence in the Greek economy.
“Clarity over the debt measures is also a prerequisite for a possible participation of the Greek bonds in ECB’s quantitative easing programme,” said Coeuré.
“We are sorry that the debt relief measures were not defined at the last Eurogroup meeting. The deliberations are in progress, but I believe that it is important to reach an agreement at the Eurogroup meeting on June 15,” he added.
Moscovici: I will continue to push for a solution
Optimism that there will soon be an agreement to complete the second evaluation was expressed by the Commissioner for Economic and Monetary Affairs Pierre Moscovici, with a recorded message for the Economist Conference.
“Over the past few months, we have come close to an agreement to close the second evaluation. We will do our best to reach an agreement as soon as possible. To build on the significant progress that has been made. I will continue, on behalf of the Commission, to press all the players involved in finding a solution and ask that the 11 million Greek citizens are taken into consideration”, he stressed and added,” I am optimistic that Greece will succeed and open a new chapter in its long history. ” He mentioned the big fiscal adjustment that has been made. “Greece has shown great responsibility by achieving an unprecedented fiscal adjustment estimated at over 16% of GDP in a period of deep recession. It’s in good shape. It has a significant primary surplus of 4.2%, recording outperformance targets in 2016. It is able to fulfill its budgetary targets for the coming years. ”
Stournaras: Huge progress has been made in Greece
Governor of the Bank of Greece, Yiannis Stournaras, stressed the “huge progress” that has taken place in Greece since 2010 in the correction of the imbalances.
“It is a unique and unprecedented progress in Europe and the OECD,” he said, noting that there is still much to be done and that high debt and high unemployment are still problems that make the Greek economy difficult.
In his speech, mainly on whether we are near the return of Greece to the markets, Mr. Stournaras stressed the need to resolve the debt issue as a key condition for the recovery.
He presented a settlement proposal, which is based on maintaining the target for a primary surplus of 3.5% of GDP by 2020 and then declining to 2%. According to this scenario, in order to make the debt sustainable, steps should be taken such as postponing interest payments, lengthening maturity of loans and returning Greek banks’ profits to Greek bonds (SNP and ANFA).
As he stressed this is the “least” Greek debt needs to become viable. In conclusion, Stournaras underlined that the facilities for paying interest on loans are a much more effective method of reducing debt than the increase in primary surpluses.
Costello: Greece has implemented a “huge, unprecedented” reform program
The view that Greece has implemented a “huge, unprecedented” reform program was expressed by the head of the European Commission delegation to the Greek program, Declan Costello.
He said that about 120 of the 140 requirements of this assessment have already been implemented, adding that the remainder is expected to be completed in the next 10 days for Greece to receive the next installment, following the “very positive” assessment in the last Eurogroup. Therefore, he stressed that Greece is no longer facing a fiscal problem, that in the Commission’s view there is no need to take any further steps and that the priority is now to “help Greece regain access to the markets”.
However, he pointed out that effective implementation of the agreed reforms will be seen in the coming period, and that the Greek Government, and especially the privatization program, is an important factor in the return of investment.
Although Greece deserves congratulations on its reform efforts so far, further changes would boost development and help the country, said Nicola Giammarioli, the head of the European Stability Mechanism.
Mr Giammarioli reiterated both the ESMs and Berlin’s stance that substantive decisions on the debt will be taken after the end of the Memorandum in 2018 only if it is necessary and only if Greece has fulfilled all its memorandum obligations.
Mr. Giammarioli underlined that lenders have already lightened Greek debt. First in 2012, when private creditors suffered a haircut of 53%, and then when the ESM offered a package of facilities that reduced service costs.
Low interest rates and long loan durations reduce debt servicing costs by € 10 billion a year, or about 6% of Greek GDP.
Charitsis: Signs of recovery and consolidation of growth in Greece
Deputy Minister of Economy and Development Alexis Charitsis spoke of signs of recovery and consolidation of growth in Greece, despite delays.
He said that “despite the uncertainty due to the delay in the second evaluation of the program, for which the Greek government is not responsible, as recognized by the European Commission, the Greek economy shows clear signs of improvement”.
The Deputy Minister spoke of a significant increase in exports (25.7% in March 2017 compared to March 2016), industrial production (24.5% in March 2017 compared to March 2016) and retail (9, 6% in February 2017 compared to 2016) in previous months, which in his opinion is indicative of a growth momentum in Greece./ΙΒΝΑ
Photos: IBNA/Spiros Sideris