Just three months before Greece is due to exit its bailout programme, PM Costas Simitis says the government has no essential growth plan, and he addresses the post-bailout challenges and dangers that the country faces, in an Op-Ed piece in To Vima on Sunday.
Simitis says that the government’s declarations of a clean exit from the bailout programme and an autonomous Greek fiscal policy are unfounded, and that it has no coherent proposal on the form of debt relief.
He says enhanced supervision will be based on the fact that Greece still owes its EU and IMF creditors 248bn euros (a whopping 180 percent of GDP) and has agreed to fiscal surveillance until it has paid off 75 percent of that amount.
Simitis argues that debt relief will be accompanied by harsh terms, and that the form it will take has not yet been decided. The questions that remain open are whether there will be a partial write-down, the timetable of debt servicing, and whether repayment will be linked with growth, which France advocates but Germany and The Netherlands dismiss.
Simitis argues that a post-bailout precautionary credit line will facilitate Greece’s borrowing from the markets with reasonable interest rates, and will be a bulwark if domestic or international financial difficulties arise. He stresses that doubts about the economy’s future will lead to higher interest rates.
As for the government’s growth plan, which was sent to Brussels, Simitis said that the EU sent it back to Athens within days and said that the plan is merely a wish list, that specific targets and timetables must be set, and that the proposals in some cases violate what Greece has already agreed to implement.
Simitis suggests the government may wish to clash with creditors over a clean exit, postpone an agreement for electoral reasons, and call elections as the embattled underdog.
“A country in need changes only with continual effort, years of systematic work, realistic targets, honesty towards citizens, linkage and cooperation with the international environment, and its leaders’ cognizance of their responsibilities,” the former PM concludes.