Greece condemns proposed economic reforms

Greek finance minister promises compromise in negotiations on next loan instalment

Yanis Varoufakis, Greece’s finance minister, speaks during a panel discussion at the Brookings Institution on the sidelines of the International Monetary Fund (IMF) and World Bank Group Spring Meetings in Washington  Photograph: Andrew Harrer/Bloomberg

Yanis Varoufakis, Greece’s finance minister, speaks during a panel discussion at the Brookings Institution on the sidelines of the International Monetary Fund (IMF) and World Bank Group Spring Meetings in Washington Photograph: Andrew Harrer/Bloomberg

 

Greek finance minister Yanis Varoufakis promised to compromise in negotiations over the next instalment of a bailout loan that would prevent a default on the country’s debts.

But he also denounced some of the reforms demanded by the country’s European creditors, suggesting the two sides remain far apart.

Speaking in Washington DC, he said his government was elected to “challenge the logic of a programme that has clearly failed”.

His comments came as Greece’s borrowing costs soared amid growing fears of a debt default.

Greece is shuffling funds among government agencies and delaying payments to suppliers to repay its loans.

Greek officials hope an agreement can be reached next week, but officials from Germany and other European nations have suggested that is unlikely.

German finance minister Wolfgang Schaeuble, who is also in Washington, gave no sign of backing down from his hardline stance that Greece must agree to sweeping economic reforms.

European Union spokesman Margaritis Schinas said: “We are not satisfied with the level of progress made so far.”

Mr Varoufakis acknowledged that Greece’s economy requires “urgent and extensive” reforms.

But he challenged measures favoured by Germany and other creditors, such as pension cuts, faster privatisation of state-owned companies, and changes to employment rules to make it easier to fire workers.

Previous efforts by Greek’s government to privatise publicly owned companies were “disasters,” Mr Varoufakis said, because the prices of such assets had fallen “through the floor” and did little to offset the country’s debt.

“We’re not against privatisation,” he said. “We’re against this kind of fire sale.”

But Mr Varoufakis insisted his government would seek swift agreement.

“The answer is simple — we will compromise, we will compromise, and we will compromise in order to come to a speedy agreement.

“But we are not going to be compromised.”

In February, the Greek government, elected on a promise to end crippling austerity measures, was asked to come up with a series of economic reforms to obtain a €7.2 billion instalment of its bailout loans.

The country has relied on €240 billion in such loans since 2010.

But the country’s creditors, which include the International Monetary Fund, have so far found Greece’s proposed reforms insufficient.

Investors are wary and the yield — a gauge of investor risk — on Greece’s 10-year bonds surged a whole percentage point yesterday to just below 13 per cent. The three-year yield jumped to a staggering 28 per cent.

Many in the markets think that without a deal, the Greek government will struggle to make upcoming debt repayments.

Market jitters were intensified by a report in the Financial Times that the Greek government recently made an “informal approach” to the IMF to have bailout repayments delayed.

Greece’s finance ministry said the report was “totally false”.

IMF managing director Christine Lagarde rejected the possibility that it would grant Greece a delay. She said no advanced economy had ever made such a request.

Mr Vanoufakis is in Washington, along with Mr Schauble, for the annual spring meetings of the IMF and World Bank.

Reuters

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