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Europe

Greece must deliver on pledges to remain in eurozone, says Barroso

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Text by News Wires

Latest update : 2012-07-27

Following talks with Greek leaders in Athens on Friday, European Commission President José Manuel Barroso said Greece must meet its obligations to the EU and the IMF as well as deliver on fiscal reform if it wants to remain in the eurozone.

AFP - Greece must deliver on its obligations if it wishes to remain in the eurozone, European Commission President Jose Manuel Barroso, on his first visit to Athens since the crisis began, said on Thursday.

"To maintain the trust of its European and international partners, the delays must end. Words are not enough, actions are more important," Barroso said after talks with Greek premier Antonis Samaras and Finance Minister Yannis Stournaras.

Stournaras, elected in June, is now in charge of pushing through a new wave of reforms demanded by EU-IMF lenders while also committed to offering a sigh of relief to a Greek population fed up with more than two years of crisis.

The heavily indebted country is under immense pressure to carry out a structural reform programme, part of the EU-IMF multi-billion loan agreements that have been keeping its economy alive since 2010.

"All heads of states and governments of the euro area have stated in the clearest possible terms that Greece will stay in the euro as long as commitments made are honoured," Barroso told his hosts.

But during the difficult process, the "Greek people don't stand alone", Barroso said.

Samaras, who leads a three-party coalition government that campaigned on keeping Greece in the eurozone, said he was "determined to go ahead with structural changes and privatisations and implement the measures agreed on in order to reduce the deficit".

But the key measure demanded by EU-IMF lenders, whose auditors are again in Athens inspecting government books, now includes 11.6 billion euros ($14.3 billion) in new spending cuts, which is certain to face stiff resistance by Greeks.

Earlier in the day Samaras met the socialist and moderate leftist partners of his government whose support is essential to pass the spending cuts.

After the meeting, the party leaders acknowledged the country's desperate financial situation, but also stressed the sacrifices already made.

"Our ultimate fiscal target can be achieved without fuelling recession and unemployment," socialist PASOK party head Evangelos Venizelos said.

"Our international partners need to understand this," he added and warned against making a "sacrificial victim" out of Greece.

The finance ministry said on Thursday that the spending cuts, expected to come largely from pensions, health care and benefits, would help Greece negotiate an extension in the implementation of its programme, as it struggles with recession.

There have been great delays in the implementation of the programme, as Greece held back-to-back elections in May and June and experienced a two-month political deadlock.

The auditor team from the European Union, International Monetary Fund and European Central Bank met with the finance minister earlier on Thursday.

The audit report, which will determine whether Greece will receive 31.5 billion euros from its EU-IMF loan programme, is expected to be made public at the end of August or early September.

Greece needs money to pay state salaries and pensions, to recapitalise banks hit by a sovereign debt rollover earlier this year but also to repay 3.2 billion euros in debt to the European Central Bank on August 20.

Earlier this week, Greece's former IMF representative argued that the austerity programme looked unlikely from the start.

"We knew at the fund from the very beginning that this programme was impossible to be implemented because we didn't have any - any - successful example," Panagiotis Roumeliotis, now vice chairman at Piraeus Bank, told the New York Times.

The IMF though said on Thursday that it expected discussions with Greek authorities over the country's bailout-supported programme to continue into September, longer than expected.

Date created : 2012-07-27

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