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Greece expects a clean break with lenders, no reason for precautionary credit line, says Tsakalotos

Greece expects a clean break with lenders when the bailout program expires in summer, the country has no reason to seek a precautionary credit line, Finance Minister Euclid Tsakalotos told Reuters in an interview.

Instead, the country is building up its own protective buffer that, along with unused European bailout funds, will cover Greece “for well over a year”, if needed, Tsakalotos said.

In coming months, he said, the country would be preparing its own post-bailout plan with an emphasis on reforms, social policies and growth.

He also said discussions would soon commence with euro zone lenders on debt relief along the lines of a French proposal to link the level of debt restructuring to economic performance.

“We feel we have built credibility over the last three years,” Tsakalotos said.

Greece has received a record 260 billion euros in repeated bailouts since 2010.

The leftist-led government of Alexis Tsipras has vowed to end the humiliation of austerity imposed on Greece by its international lenders, but the nation still has a debt burden of 178 percent of economic output and some European policymakers believe Athens cannot go it alone without debt relief and a standby line of credit.

A precautionary credit line, though, would come with yet more conditions attached, so Athens is proposing its own plan. It is also creating a safety net of up to 19 billion euros drawn from leftover, unused bailout funds and from bond issues.

Post-program surveillance schemes were common to other European member states which sought financial aid, Tsakalotos said. But Greece’s own post-bailout plan would be more pro-active.

It would, he said, show lenders and the markets that Greece had ownership over its own program of future reforms and growth strategies, rather than Brussels.

 “We are thinking, by Easter, of preparing our own plan .. to show both the institutions but also the markets that it is our program, it has ownership… it hasn’t been imposed, it’s not a matter of compromise,” he said. – full interview here.

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One comment

  1. Giving ‘our creditors’ warning doesn’t seem a good plan.

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