Berlin.- German Foreign Minister Guido Westerwelle ruled out any renegotation of Greece’s budget austerity programme in an interview published on Saturday.
“I see desires emerging in Greece to renegotiate and substantially question the country’s obligations to carry out reforms. I have to say simply, that will not do. It is a Rubicon that we are not going to cross,” Westerwelle told the daily Bild.
He called on Athens to clearly demonstrate that it wanted to remain in the eurozone. “Greece must not just say that it wants to stay in the eurozone, but must also implement a clear policy of reforms and keep its commitments,” he added.
Auditors from the European Union, International Monetary Fund and the European Central Bank — the so-called troika of Greek creditors — are expected in Athens next week for another in-depth inspection of the new government’s economic programme.
The troika’s report will determine whether Greece will receive fresh loans of 31.5 billion euros by September due under its debt rescue programme.
Finance Ministe Yannis Stournaras sought to assure his eurozone counterparts during a teleconference on Friday that Greece would meet the targets in its fiscal adjustment, as the government seeks more measures to make these goals more attainable.
Greece was not on the agenda during Friday’s Eurogroup conference call but sources told Kathimerini that the chair, Luxembourg Prime Minister Jean-Claude Juncker, did ask Stournaras about how the new Greek government is progressing with its fiscal policy ahead of a troika visit next week.
Stournaras set out the measures the coalition is planning to take this year, when it has to make a further 3 billion euros of savings, and over the next two years, when some 11.5 billion euros has to be cut.
The government has identified where most of these savings will come from but still has to finalize the spending reductions before representatives of Greece’s lenders arrive in Athens. Sources told Kathimerini that one of the steps being examined is to withdraw tax breaks for families that have a combined income of more than 40,000 euros but to retain them for those earning under 30,000 gross.
There are about 350,000 families in the 30,000- to 40,000-euro income bracket and reducing their tax exemptions by 50 percent would raise some 400 million euros for public coffers. Some 550,000 families had incomes of more than 40,000 euros in 2010. Their tax breaks come to 1.8 billion euros, meaning the government could earn another 900 million by halving them.
The government hopes it will do enough next week to convince the troika it is serious about meeting the fiscal targets but the lenders’ report on the Greek program is unlikely to be ready before August 20, when a 3.2-billion-euro bond held by the European Central Bank matures.
As things stand, Greece does not have the money to cover the government note. Greece is expected to have a budget surplus of 1.3 billion euros at the end of July but is expected to run a substantial deficit in August, meaning it will have either to receive a bridge loan or a different solution will have to be found to avoid default.
European Commission Monetary Affairs spokesman Simon O’Connor said on Friday that a “technical solution” is being sought, without going into details.
“Simply because we haven’t explained precisely what [solution] will be found doesn’t mean we’re not working on it,” O’Connor told journalists in Brussels.
Prime Minister Antonis Samaras spoke by phone on Friday with European Central Bank (ECB) President Mario Draghi.
According to reports, the two men discussed several of the latest developments in Europe, as well as Greece-specific matters. A face-to-face meeting was decided for next month.
Meanwhile, a meeting between Samaras and IMF Managing Director Christine Lagarde will probably come sooner, with whom the Greek premier also spoke by phone on Thursday.
Greece needs to “positively surprise” Europe and the markets by signalling its determination to carry out reforms and privatisations, Development, Competitiveness, Infrastructure, Transport and Networks Minister Kostis Hatzidakis said on ‘Real FM’ radio on Friday.
The minister said the government was keen to press ahead with privatisations in order to boost growth and noted that by carrying out privatisations, “you send a message that you are a country that is friendly to businesses”.
“With every privatisation, we will be sending a message inviting other business people to come to the country in order to create new jobs, which is what is required,” he said.
Referring to public utilities and especially the water company in Athens EYDAP, the minister said that one of the conditions for privatisation would be to set up a regulatory authority to protect consumers and public health while the management, instead of staying with the state, would go to a major company with a concession contract.
Concerning the heavily indebted Greek Railways Organisation, he said that a series of legal issues would first have to be resolved.