Davos.- Prime minister George Papandreou stressed his government’s determination to implement its program for the needed reforms and changes in Greece, as well as its efforts to achieve an extension for repayment of the country’s EU-IMF support mechanism loan, while at the same time ruling out a restructuring of the Greek debt, in an interview with the Austrian newspaper Die Presse appearing Saturday.
Noting that the government’s program needs to be implemented, the premier clarified that even if Greece had a zero debt, the reforms and changes would have been needed, since the system was not sustainable and competitive, there was a lack of transparency, and little had been invested in the sectors in which Greece has a competitive edge such as tourism, green technologies and innovation.
On the loan repayment timetable over the next years, Papandreou stressed that debt restructuring is not an option for Greece, which has said that having more time to repay its debt would be helpful.
The premier said that the longer repayment period for the loan should be more or less the same with that given to Ireland, since Greece was given a short period of time and thus the markets believe it will be difficult for the country to be able to repay such a large amount in just 4-5 years.
He pointed out that it would be much easier on Greece if the same criteria were applied as for Ireland, which would calm the markets and critics, adding that the eurozone finance ministers have taken a relevant decision which, however, has not yet been applied.
Questioned on the root problems, Papandreou pointed to a big black economy and tax evasion, compounded by wasteful spending of public money.
Despite the negative growth of the past year, revenues from taxes have risen by 10 percent, and this indicates that the Greek economy still has a field for action, and that in tandem with clamping down on tax evasion there can also be a reduction in taxes, with achievement of higher revenues, Papandreou noted.
He reiterated that the austerity program, as painful as it was, must be adhered to, stressing that the crisis must be utilised to solve some of the structural problems, while at the same time serving as an opportunity for a change in the structures in Europe.
Asked whether early general elections will be held in Greece, given that some observers believe that a debt restructure would follow early elections, Papandreou stressed that elections will take place in 2013.
European governments are discussing a plan to offer Greece loans from the European Financial Stability Fund (EFSF) to repurchase part of the country’s existing debt, a European Commission spokesman said on Friday.
Prime Minister George Papandreou met here on Friday with the President of the Swiss Federation, Doris Leuthard, with talks focusing on the establishment of a bilateral committee to pinpoint untaxed capital exported from Greece to Swiss banks.
Greek FinMin George Papaconstantinou, referring to the same issue, said that beyond any bilateral agreement, his ministry will exploit all information available to trace the illegal flight of capital to Switzerland and other countries.
Finance Minister George Papaconstantinou on Friday said Greece could return to the debt market by the end of this year and reiterated that Athens would not restructure its debt to private creditors.
Greece became the first euro zone country to receive an EU/IMF bailout last May, receiving 110 billion euros in loans after it was shut out of capital markets due to massive debts.
Separately, Greek Prime Minister George Papandreou said European Union governments were considering the possibility of allowing EU financial institutions to recapitalise European banks that need bolstering.
Papandreou was asked whether a collective solution at an EU level to recapitalise banks that needed funds along the lines of the U.S. TARP programme was under consideration.
“These are issues which are being seriously discussed now,” he replied. “Who is going to do this if it is necessary? Will it be the EFSF? Will it be the ECB (European Central Bank)? These are issues that are on the table.”
His finance minister stuck to an official forecast of a 3 percent contraction in Greek GDP this year after a 4 percent fall in 2010, but added: “Let’s see if we can surprise the market.”
Athens is committed under its austerity programme to cut its budget gap to below the EU limit of 3 percent of GDP in 2014.
Greek Prime Minister George Papandreou twice ruled out the prospect that Greece would default on or restructure its debt while speaking to journalists on Friday. He stressed that if restructuring or a ‘haircut’ had been a part of Greece’s plans, it would have done so at the start of the crisis.
He noted that Greece has a road map for getting out of debt and this did not include default. The Greek premier also noted that the measures and reforms being carried out by the government were not imposed by the International Monetary Fund but would have been necessary even if the country had no debt at all.
No one believed that Greece would take these measures and get results a year ago but it was now clear to everyone that we meant what we said, he added.
The Greek premier emphasised that his government had an ambitious programme for restoring the economy to health and was sticking to this, while especially stressing the importance of transparency in issues of governance.
Questioned about how well these measures were being received in Greece, and whether there was anger and a sense of injustice, Papandreou admitted that several harsh measures had been taken and a certain degree of anger was to be expected but noted that people still gave their support “because they realise that we are changing the country”.
He stressed that his government had found huge levels of waste, mismanagement and lack of transparency when it had taken over and had already delivered half of the things agreed in the three-year Memorandum with the IMF and EU during the first year.
The prime minister stressed that Greece was doing everything that was necessary and needful to regain the confidence of the markets and had made significant progress in regaining competitiveness, boosting transparency and breaking into new sectors.
Papandreou also referred to a series of agreements for Chinese investments in Greece, stressing that these were a positive development. He said the goal was to convert Piraeus, which would receive a major Chinese investment, into a centre for innovation.