Brussels, 27/01/2015 (Agence Europe) - On Tuesday 27 January, Alexis Tsipras, the new prime minister of Greece, named Yanis Varoufakis as his finance minister.
This 53-year-old economist is well known for his tough line on austerity, which he wants to put an end to, and his clear determination to renegotiate the terms of the adjustment programme and of the Greek debt. The general index of the Athens Stock Exchange fell more than 5% following the announcement of the Greek government line-up.
Eurogroup inclined to cooperate
On Monday evening, after the Eurogroup meeting, the Commissioner for Economic and Financial Affairs, Pierre Moscovici, said that the rapid formation of a government was “positive news”, showing that the country is capable of getting down to work quickly to face challenges which call for “reforms”. When asked about the considerable gap between Syriza's election manifesto and the economic adjustment programme in place, the President of the Eurogroup, Jeroen Dijsselbloem, noted the ambitions stated by the new powers, including that of “staying in the eurozone”. Observing that the markets had reacted moderately to the results of the Greek general elections, the Dutchman stressed the importance of ensuring that the progress made to date is not in vain. “Maybe talks will be difficult, but they have not yet started”, he commented, stressing that the problems “are still there” and “still need to be solved”. Germany spoke along similar lines. The country's finance minister, Wolfgang Schäuble, stressed that the elections did not change the terms of the programme. His French opposite number, Michel Sapin, noted that the majority party, Syriza, has stressed its determination to fight tax fraud. “Fighting corruption and tax fraud is a programme of reforms and it might not be the point on which we have had the most vigourous responses” from previous governments, he said.
Dijsselbloem was not able to say when the 'troika' (European Commission, ECB and IMF) would be returning to Athens, with the second bailout plan to run until the end of February. “We need to await the stance of the new government on the future of the programme”, he said.
Relevance of debt/GDP ratio in question. When asked about the viability of the Greek debt, the Director General of the European Financial Stability Fund (EFSF), Klaus Regling, turned the discussion round to this question: “I've said so publicly many times: there is no debt overhang in Greece, at least not in the next two years if the reforms continue, because the solidarity provided is so huge that the debt ratio at which many people look is not enough to judge the real underlying situation”. Sapin repeated the ministers' commitment to make a gesture to relieve the weight of the Greek debt. In 2012, the Eurogroup undertook to make new decisions if Greece returned a primary budgetary surplus (not including the servicing of the debt), respect its commitments and if such a reduction proved necessary. Sapin declined to share his views on the subject, choosing instead to await a request from Greece.
On Tuesday, the Spanish minister, Luis De Guindos, revealed that his country had lent Greece €26 billion, the equivalent of “what we spend in a year on unemployment benefit”. “Any responsible policy would have to recover that money”, he added. He went on to state that in his opinion, Athens, which “still does not have access to the financial markets”, still needed help from the eurozone. (EL)