Monday 26 February 2018

We won't seek any more loans, says Greek finance minister

Newly appointed Greek Finance Minister Yanis Varoufakis (REUTERS/Marko Djurica)
Newly appointed Greek Finance Minister Yanis Varoufakis (REUTERS/Marko Djurica)
Germany has given a stern warning to the new Greek government that it must live up to its commitments to its creditors (REUTERS/Thomas Peter)
Greek Finance Minister Yanis Varoufakis arrives to attend a meeting in Paris

Jonathan Stearns

Greek prime minister Alexis Tsipras began the hunt for allies against German demands for austerity as his week-old government appealed to the European Central Bank not to shut off the money tap.

Finance minister Yanis Varoufakis said his country won't take any more aid under its existing bailout agreement and wants a new deal with its official creditors by the end of May.

While Greece tries to wring concessions on its debt and spending plans, it needs the ECB's help to keep its banks afloat, Varoufakis said at a briefing in Paris yesterday, his first stop on a European charm-offensive tour.

"We're not going to ask for any more loans," Varoufakis said after meeting his French counterpart, Michel Sapin. "During this period, it is perfectly possible in conjunction with the ECB to establish the liquidity provisions that are necessary."

Tsipras, who promised on Saturday to stick by Greece's financial obligations, is seeking to repair damage after a rocky first week. Bond yields spiralled and banks stocks plummeted after German chancellor Angela Merkel stonewalled his plans to ramp up spending and write down debt. The Greek leader visits Cyprus today before trips to Rome, Paris and Brussels.

He's not scheduled to see Merkel, the biggest contributor to Greece's financial rescue, until a European Union summit on February 12.

Merkel wants to avoid getting drawn into a direct confrontation with Tsipras and is unlikely to agree to a face-to-face meeting with him at next week's gathering of leaders.

The chancellor's goal is to show Tsipras that he is isolated, according to one German source.

What's more, she sees little margin for manoeuvre on the conditions of any further support for Greece and is skeptical about Tsipras's claims that he can raise revenue by cutting corruption and increasing taxes on the rich, the official added.

"Europe will continue to show solidarity with Greece, as well as other countries particularly affected by the crisis, if these countries undertake their own reforms and savings efforts," Merkel said in an interview with 'Hamburger Abendblatt' on Saturday.

While euro-area officials want Greece to stick to the austerity demands of its existing bailout agreement, Tsipras is seeking a debt writedown so he can increase public spending.

The danger is that the Greek financial system is left without funding long before Tsipras's May deadline for a deal.

At the moment, the country has a special dispensation from the ECB because it's considered to be complying with the bailout programme. That means its debt can be used in central bank refinancing operations even though it is rated junk.

Irish Independent

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