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Greece to keep repaying creditors - as long as it can

Tuesday, May 26, 2015 - 07:07
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Struggling Greece will keep repaying its EU-IMF creditors for as long as it can, with some 300 million euros (S$442 million) due next week and no deal in sight in talks over its remaining bailout funds, a government spokesman said Monday.

[ATHENS] Struggling Greece will keep repaying its EU-IMF creditors for as long as it can, with some 300 million euros (S$442 million) due next week and no deal in sight in talks over its remaining bailout funds, a government spokesman said Monday.

"To the extent that we are able to pay, we will keep on repaying these obligations," spokesman Gabriel Sakellaridis told reporters.

He added: "It is the government's responsibility to be able to repay all these obligations... It is also the responsibility of the creditors to be faithful to (their) loan obligations." Greece's radical-left government has been locked in negotiations with its creditors - the IMF, the European Union and the European Central Bank - for the past four months in a bid to unlock some 7.2 billion euros in bailout cash.

The IMF's chief economist Olivier Blanchard said Monday budget reforms that Greece has proposed to its international creditors are not enough to ensure a surplus this year.

Greece was supposed to have a three-per cent budget surplus in 2015, but that now looks out of reach, Mr Blanchard was quoted as saying by French financial newspaper Les Echos.

"Given the latest estimations show a substantial budget deficit for the time being, credible measures are needed to transform this into a surplus and maintain a surplus in the future," he said.

"Seeing what has been put forward so far, we are still quite far off." On Sunday, Greece's Interior Minister Nikos Voutsis said Greece had "no money" to make a series of repayments to the IMF that are due from June 5.

"The instalments for the IMF in June are (overall) 1.6 billion euros (S$2.35 billion). This money will not be given. There isn't any to be given. This is a known fact," Mr Voutsis said Sunday.

The Syriza-led government, which was elected in January on an anti-austerity platform, has so far refused to agree to key economic reforms that the creditors want in exchange for the rescue funds.

But with a punishing debt repayment schedule in the next three months, the country now desperately needs those funds.

Last week, the parliamentary spokesman for Syriza had also said that the government would be unable to honour its repayments to the IMF as its priority is to pay salaries, pensions and running costs.

"No country can repay its debts with only the money from its budget," Nikos Filis told Ant1 television.

Greece has stayed afloat by tapping into public corporation reserves and an emergency account at the IMF.

On Monday, the finance ministry reported a tax revenue shortfall of 884 million euros in the first four months of the year.

Talks in Brussels over the Greek reform list will resume on Tuesday, Sakellaridis said.

He added that the two sides were still apart on tax issues, social insurance, labour rights and the size of Greece's budget surplus, but the government's goal was to secure a "mutually beneficial" agreement by early June at the latest.

AUSTERITY 'DEAL-BREAKER'

"Austerity is the only deal-breaker," Finance Minister Yanis Varoufakis wrote in a Project Syndicate blog entry.

"Greece's creditors insist on even greater austerity for this year and beyond... Our government cannot - and will not - accept a cure that has proven itself over five long years to be worse that the disease," he wrote.

The outspoken Varoufakis - said to have irritated European ministers in the debt talks - could not resist taking a swipe at the country's creditors.

"Clearly, our creditors' demand for more austerity has nothing to do with concerns over genuine reform," he said.

"Their true motivation is a question best left to future historians."

NO CASH CONTROLS

Meanwhile government spokesman Sakellaridis denied a report by Greece's Mega TV that Prime Minister Alexis Tsipras had asked US Treasury Secretary Jack Lew to help persuade the IMF to agree to group all four June repayment instalments to the end of the month.

"I read these reports, there is no such case. We have not examined it and no such case has been put to the Greek government," he said.

The spokesman also dismissed speculation of possible capital controls - meaning limits on cash withdrawals - being imposed over next weekend if no deal emerges.

"Such scenarios are entirely baseless and malicious... There is absolutely no possibility of capital controls," he said.

AFP

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