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Posted on: August 20th, 2012 by AlYunaniya Staff No Comments

Greek FinMin: “We need to stay alive”

Stournaras Eurogroup - source EU

photo: EU

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“We need to stay alive, hang there, under the umbrella of the euro, because only this option can protect us from poverty that we have never lived before,” said Finance Minister Yannis Stournaras in an interview with To Vima on Sunday.

Stournaras argued that Greece “has the most expensive welfare state in the Eurozone”; “we cannot maintain it with borrowed money”, he added.

FinMin, who is about to deliver to Prime Minister Antonis Samaras the general sets of measures before the PM’s trip to Berlin and Paris stressed:  “Let’s not fool ourselves.”  “If we do not take the measures –which troika originally had asked to exceed EUR 13.5 billion when they came to Athens in July- then Greece’s stay in the euro area is threatened. I told political leaders who are fully aware of the situation that I do not want to be the one that will be hanged in Syntagma square.”

According to Kathimerini, Prime Minister Antonis Samaras seems to be fully aware of the low credibility of the Greek political elite in Eurozone decision-making circles and -rightly so- would like to have some cards to play before submitting an official request at an EU summit. Agreeing with the troika on the EUR 11.5 billion package of expenditure cuts is just a first step. In addition, speeding up the first round of mergers and acquisitions activity in the local banking sector and finalizing the long-awaited terms of their recapitalization will help, along with one or two high-profile moves on the privatization front and more progress in slashing the budget deficit.

Meanwhile, Germany’s Der Spiegel magazine insisted on Saturday that Greece would likely need to cut an additional EUR 2.5 billion in spending over the next two years to meet demands made by its international lenders in return for financial aid. Citing an interim report by the troika, Der Spiegel said Greece would likely need EUR 14 billion over the next two years to get its deficit below 3% by the end of 2014, up from a previously expected EUR 11.5 billion.

The troika representatives wrote the report after their last trip to Athens and would determine the exact amount needed when they next visit Greece in early September, Reuters reported, citing the magazine.

Meanwhile, according to sources, the government is close to identifying where all of the 11.5 billion euros in public spending cuts the troika is demanding for the next two years will come from, Kathimerini. Following a meeting at the ministry late on Friday, it was revealed that EUR 10.8 billion worth of measures have been agreed by officials and that the remaining EUR 700 million will be identified at a meeting later today. The measures, however, still need the approval of the three coalition leaders before they are put to Parliament.

The bulk of the cuts, some EUR 4 billion are expected to come from pensions and welfare benefits. This would be the fourth cut to pensions since 2010, when Greece signed up to the EU-IMF bailout. Pensions have been reduced by up to 40% since then.

According to the paper, cuts to salaries at public enterprises are also expected. Sources said that the reduction is likely to reach between 30 and 35%.

The government is also set to announce the gradual removal of 34,000 civil servants who will be placed in a labor reserve scheme, where they will receive a percentage of their salary for the next 12 or 24 months and will no longer be employed in the public sector.


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