International Monetary Fund boss Christine Lagarde has ruled out any further delay to €1.6bn of loan repayments due from
Greece
by the end of the month, raising the pressure on Athens as eurozone
finance ministers gathered in Luxembourg to discuss the growing crisis.
Lagarde said there would be “no grace period or possibility of delay” to loan payments that are due on 30 June.
It follows a series of threats by the debt-stricken Greek government
that it would be unable to pay without a deal with Brussels and the IMF
to provide extra funds.
Lagarde said the leftist Syriza administration would need to concede
over making further reforms to its pension system to get a deal,
something prime minister
Alexis Tsipras has refused to countenance.
Writing in German newspaper
Der Tagesspiegel,
Tsipras said pensioners had become the main breadwinners in many
families, meaning cuts in pension payments would increase poverty.
“The social security system is the institutionalised mechanism of
intergenerational solidarity, and its sustainability is a main concern
for society as a whole,” he said.
“Traditionally, this solidarity has meant that young people, through
their contributions, fund the pensions of their parents. But during the
Greek crisis, we’ve witnessed this solidarity being reversed as the
parents’ pensions fund the survival of their children.”
But the IMF and Brussels want further cuts to bring down the cost of
pensions, which account for 13% of GDP, with further restrictions on
early retirement and lower supplementary pension payments.
Greek negotiators, who head into talks with eurozone finance
ministers on Thursday, have ruled out cuts in pensions, saying there is a
reform plan that reduces costs dramatically over the next 10 years.
The meeting is expected to be short, with little likely to be
decided, despite warnings that Greece is heading for a possible exit
from the euro without an extension of its current bailout deal.
The gathering of finance ministers from the currency bloc’s 19 member
states is due to discuss the gulf between Athens and its creditors, but
is expected to delay any decisions to a summit of EU leaders next week,
officials in Brussels said.
With no fresh proposals on the table, the ministers have indicated
that there is little point in a prolonged debate about a potential deal
at the meeting.
The Greek government said it remained ready to join talks to secure
an agreement, but could not accept the current proposals to cut pensions
or achieve a 1% budget surplus in the middle of a recession.
Chief negotiator, Euclid Tsakalotos, warned on the BBC’s Today
programme on Radio 4 this morning that “If Greece goes out, the euro
might break down.”
He said: “Once one country has left, you change a monetary union into
a fixed exchange rate system,
where it’s a cost-benefit analysis
whether another country leaves.
“My greatest fear is that the break-up of the euro will return [us]
to the competitive devaluations, and the nationalisms, and the kind of
politics we had in the 1930s.”
He added: “If we have don’t [have a deal], we have to go to the Greek
people because we have no mandate to leave the euro, and that would be a
very bad eventuality.”
EU commissioner, Pierre Moscovici, who has voiced some sympathy for
Athens, said: “Today is an important date and I have no desire to see us
return to the age of Waterloo when the Europeans were all lined up
against a single state.”
The Greek stock market has slumped 17% in a week after the country
reached an impasse with its troika of lenders – the European commission,
the
International Monetary Fund (IMF) and European Central Bank (ECB).
A war of words between the Greek prime minister, Alexis Tsipras, and
the troika has become further inflamed after he accused the IMF this
week of “criminal responsibility” for the situation and said lenders
were seeking to “humiliate” his country.
Jean-Claude Juncker,
the president of the European commission, responded that he had
“sympathy for the Greek people but not the Greek government”. Juncker
was until recently viewed as one of Tsipras’s few allies.
Informal talks could take place over the weekend ahead of next week’s
summit after the ECB threw Athens a lifeline by raising the maximum
emergency funding that Greek banks can obtain by €1.1bn (£790m).
The increase, which brought the overall ceiling on emergency
liquidity assistance to €84.1bn, came after a stark warning from the
Bank of Greece that the country could crash out of the eurozone in an
“uncontrollable crisis” unless it can conclude loan talks with its
creditors by the end of the month.
Yannis Stournaras, the bank’s governor, used his
annual report to the Greek parliament
to warn that failure to reach a deal would “mark the beginning of a
painful course that would lead initially to a Greek default and
ultimately to the country’s exit from the euro area and – most likely –
from the European Union”.
Stournaras, a finance minister in the previous rightwing and
pro-bailout New Democracy administration, was roundly criticised by the
government for undermining the negotiating position of elected
officials.
Zoe Konstantopoulou, the president of the parliament, said the
governor had not only breached his constitutional role but actively
attempted to limit the room the government had for manoeuvre in its
negotiations with creditors.
She said in a statement: “With his report today, the governor of the
Bank of Greece not only exceeded the boundaries of his institutional
role, he is attempting to contribute to the creation of an asphyxiating
framework in the moves and negotiating abilities of the Greek
government.”
The governor’s remarks came before Greece’s
Syriza-led
government confirmed it will run out of money by the end of the month
unless its creditors agree to release €7.2bn in bailout funds.
Tsakalotos has conceded that the country does not have the funds to make a €1.6bn payment due to the IMF on 30 June.
Athens delayed a payment to the IMF earlier this month, saying it
would take advantage of a technical loophole allowing it to bundle four
tranches due this month into the single €1.6bn sum.
Source:
http://www.theguardian.com
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