Greece’s finance minister Yanis Varoufakis told during a conference organized by the Economist in Athens that he will never “put his signature” to an agreement where Greece is once again plunged into an economic death spiral.
His statement made headlines, with Open Europe twitting «Fin Min Varoufakis says #ECB payments in July/Aug should be delayed. Wants deal reached by end of month with creditors».
“After 5 years its evident that austerity has failed, what matters now is the implementation of an agreement and not to secure the next installment. Without a deal the country will default” Varoufakis said.
According to Varoufakis Greece's creditors show some understanding but there are limitations of political nature. He stated that the Greek government is not willing to cut pensions and rise VAT in the Greek islands in order to unlock a €7 billion installment. “Even if the installment is made we will face yet another dead end situation in a few months time. This is something nobody wants” the FM said and he added that there will no be a VAT rise till autumn since the government was committed to take some anti-recession measures in its election campaign.
To reduce the debt we should reach a primary surplus of around 20% of GDP something that if happens will definitely have a negative impact on investments. Even if the dept is erased the problem of development will not be solved, he said. The main aim of the negotiations should be to to escape from austerity.
Syriza promised to rehire 3,000 laid-off government workers in its election campaign and the recent reinstatement of the cleaning ladies at Greece's finance ministry was perhaps the most symbolic measure announced by the Greek government. According to Varoufakis this measure was an act of “repairing past injustice”.
The FM said that Greece and its lenders agree on the need to move ahead with other measures, such as to sweep away privileges and protections for vested interests, as well as greater fairness in taxation to shift the burden to the better-off and improve collection. He also confirmed that the pension system remains an issue and that the Greek government intends to implement measures such as the merging of insurance funds and the elimination of early retirement benefits. He said that both sides agreed that the previous Greek governments were promising measures they could not implement.
Varoufakis said that the privatization of state property will continue with the state still having shares in the companies to be privatized. He proposed the idea of the foundation of a Greek Development Bank with the Bank's shares to be given to social security funds in order to compensate for the loss caused by the PSIs. Finally the Greek FM highlighted that the banking system should get rid of the “red loans”, since if it could not manage the NPLs it wont be able to support the economy.