Brussels, 30/07/2013 (Agence Europe) - On 30 July, Greek Finance Minister Yannis Stournaras aligned himself with the country's troika of lenders (European Commission, International Monetary Fund and European Central Bank), stating: “I don't see any economic risk - it's political risk and it has to do with the fatigue of MPs”.
In an interview with Reuters, Stournaras said: “MPs just reflect the average man or woman in the street - they have to believe that there is light at the end of the tunnel. If they believe it, they will continue voting the few necessary measures left over, if they don't they are not going to. This is the great risk”.
On Monday, a European Commission monitoring report again stressed the political instability that might arise and undermine proper implementation of the structural adjustment programme, thus hampering recovery (see EUROPE 10898).
In more cautious terms, Stournaras echoed the criticisms made on Monday by Italian Prime Minister Enrico Letta on errors by the EU in managing the Greek question. Stournaras said there had been problems on both sides: “There were blood and tears and mistakes made both by Greece and the eurozone - huge mistakes by both. It's not a secret that Greece did not behave according to the rules of a fixed exchange rate system but also it's equally true that the eurozone had no crisis resolution mechanism”. He went on to disagree with the Commission's forecasts that a budget gap of 1.7% of GDP would emerge in 2015 and 2% in 2012. “We are running our own forecasts for the medium term so let's first of all see if there is any fiscal gap because you know these things are very sensitive to the growth rates”, adding: “And if there is any gap, we definitely cannot cover it with wage or pension cuts or with tax rises. Any gap should be covered through reforms”.
The most recent Commission monitoring report found a €3.8 billion gap in the financing of the aid programme after July 2014, but Stournaras is thinking in terms of borrowing more money from his European partners, or even the money markets, because the financial requirements will not be huge.
Releasing aid of €1.72 billion on Monday evening, the IMF said: “The eurozone's continued commitment to provide adequate financial support to Greece during the life of the program and beyond until the country has regained market assess, provided that Greece complies fully with the program, remains essential”, noting: “Progress on institutional and structural reforms, in the public sector and beyond, has still not been commensurate with the problems facing Greece. Greater reform efforts remain key to an economic recovery and lasting growth”. (EL/transl.fl)