Greek fury as EU control over its budget is mooted
Published 30/01/2012 | 05:00
THE Greek finance minister furiously hit out yesterday against a German proposal for its budget to be controlled by a eurozone commissioner.
The proposal was suggested as a condition for Greece to receive its second €130bn bailout.
However, the Greek finance minister Evangelos Venizelos said the country was already prepared to "implement tough but necessary decisions".
"Greeks will fulfil their historic obligation to take Greece out of its deep fiscal, social and developmental crisis," he said in a statement posted on the ministry's website yesterday, before he left for today's European Union summit.
Greece's failure to implement the austerity measures agreed with its partners has made many doubt whether Athens can make progress without international assistance.
"Our partners know that European integration is based on the institutional parity of member states and the respect of their national identity and dignity," Mr Venizelos said.
"Anyone who puts a nation before the dilemma of economic assistance or national dignity ignores some key historical lessons," he added, referring to Greek fears of ceding sovereignty to Brussels in return for averting a default.
With a deal on debt restructuring now on the brink, Greece's prime minister, Lucas Papa-demos, warned the leaders of his three-party coalition that Greece still has to complete tough negotiations on boosting competitiveness and overhauling the public sector.
One main sticking point has been demands by EU and IMF negotiators for a 25pc cut in the €750 minimum monthly wage and the abolition of an annual bonus.
But the mix of spending cuts and reforms to reshape the economy risk heaping more misery on austerity-weary Greeks in the short term and few politicians want to be associated with them as they gear up for elections expected as early as April.
Underscoring the struggle Mr Papademos faces in implementing reforms, Greece's parliament last week voted against extending pharmacy hours soon after officials from the troika of lenders -- the European Central Bank, the European Union and the IMF -- arrived in town.
They have demanded Greece make extra spending cuts worth 1pc of GDP -- or just above €2bn.
Eurozone leaders at the summit will have the chance to discuss Greece's debt swap deal, which both sides late on Saturday said was close to being finalised after months of negotiation.
Under the swap, private creditors will take a 50pc cut in the nominal value of their Greek holdings in exchange for cash and new bonds. Their actual losses are expected to be much higher depending on the coupon, or interest rate, involved. Actual losses could be as high as 70pc for creditors on their holdings.
A deal, aimed at chopping €100bn off Greece's debt load, must be sealed in about three weeks at the latest as Greece has to repay €14.5bn of debt on March 20. (Additional reporting by Reuters)