Greece Asks for More Time

Prime Minister Samaras seeks to extend fiscal adjustment program by two years.

Greek Prime Minister Antonis Samaras called for “more time” to carry out policy changes to address with Greece’s debt woes as he prepared to receive Luxembourg Prime Minister Jean-Claude Juncker in Athens.

“All we want is a little more air to breathe to get the economy going and increase government revenue,” Samaras was quoted as saying in an interview with Germany’s Bild newspaper published today before the arrival of Juncker, who heads the group of euro area finance ministers. “More time doesn’t necessarily mean more money.”

Limited concessions to Greece are possible as long as they are made within the framework of the second aid program for the over-indebted country, Norbert Barthle, the parliamentary budget spokesman for Chancellor Angela Merkel’s Christian Democratic Union, said yesterday. Options include front-loading aid for Greece, fellow CDU lawmaker Michael Meister said.

Juncker is due to meet with Samaras at 5:30 p.m. in Athens as Greece remains at the heart of the crisis almost three years after the turmoil began. With contagion spreading to Italy and Spain, the European Central Bank is working on plans to help lower government borrowing costs after ECB chief Mario Draghi announced proposals on Aug. 2 to re-enter the bond market.

The euro dropped 0.2 percent to $1.2448 at 1:56 p.m. in Berlin after rising to six-week highs yesterday against the U.S. dollar and yen amid optimism the crisis is being contained.

French President Francois Hollande is due in Berlin tomorrow for talks on the crisis with Merkel. Samaras, whose government favors an extension of its fiscal adjustment program by two years, travels to Berlin and Paris on Aug. 24 and Aug. 25 as he seeks to persuade his country’s international creditors to continue the aid payments needed to keep Greece in the euro.

In his talks with Merkel, Hollande “will be watchful to make sure the integrity of the euro zone is maintained,” French government spokeswoman Najat Vallaud-Belkacem told reporters in Paris. “Greece must respect its engagements. At the same time we must give it prospects for growth.”

Germany would be “ill-advised” to allow the euro region to break up, Adam Posen, a member of the Monetary Policy Committee at the Bank of England, said in an interview with the BBC. It is in Germany’s commercial and economic interest to restructure the debt of euro-zone countries in trouble, Posen said.

 

Greek Contraction

Samaras told Bild his government is making progress carrying out “structural reforms” and selling state assets. Greece stands by its commitments even after the economy contracted by a fifth over the past three years, the standard of living dropped by a third, pensioners lost a fifth of their incomes and half the country’s youth is unemployed, he said.

Abandoning Greece now would increase uncertainty and the vulnerability of the other euro states and lead to dramatic consequences in financial markets, Samaras said, urging that the “spirit of the European Union” must be preserved.

There is a “clear process” to determine whether Greece is granted more time to meet aid conditions, European Commission spokesman Simon O’Connor told reporters in Brussels today.

The so-called troika of the ECB, the commission and International Monetary Fund “will return to Athens early in September to continue the review of the second program which has been under way now for some time, and on the basis of that assessment the Eurogroup will then be in a position to take decisions on these issues.”

 

 

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