Greek Finance Minister Yanis Varoufakis said the country’s international lenders have been offered some concessions in hopes it would lead to release of critical cash.
While the government led by Prime Minister and Radical Left SYRIZA leader Alexis Tsipras said it would never relent on key campaign promises to protect pensions and salaries, Varoufakis said it had agreed to raise the retirement age among other offers made to the troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB).
Greece is running out of cash as the government has yet to come up with a credible list of reforms acceptable to the troika before it will forward a delayed 7.2-billion euro installment.
Varoufakis gave the news in his blog just as he was heading to Riga, Latvia for a meeting of Eurozone finance chiefs where it had been hoped a deal could be reached before pessimism over Greece’s hard-line stance.
“The current disagreements with our partners are not unbridgeable,” Varoufakis wrote. “Our government is eager to rationalize the pension system (for example, by limiting early retirement), proceed with partial privatization of public assets, …create a fully independent tax commission,” he said.
Varoufakis conceded the need for reform that he had been resisting. “Greece’s tax system needs to be revamped, and the revenue authorities must be freed from political and corporate influence,” he said, without offering any way that could happen.
“The pension system is ailing. The economy’s credit circuits are broken. The labor market has been devastated by the crisis and is deeply segmented, with productivity growth stalled. Public administration is in urgent need of modernization, and public resources must be used more efficiently,” he said.
“Overwhelming obstacles block the formation of new companies. Competition in product markets is far too circumscribed. And inequality has reached outrageous levels, preventing society from uniting behind essential reforms,” he said, noting no further cuts in wages or pensions was possible.
But he said Greece wouldn’t go along with the troika’s demand to reach a goal of debt-to-Gross Domestic Product (GDP) of 120 percent by 2020, which he said can’t be done. “The result of this method, in our government’s opinion, is an ‘austerity trap’,” he said.
“Instead, we should map out a forward-looking plan based on reasonable assumptions about the primary surpluses consistent with the rates of output growth, net investment, and export expansion that can stabilize Greece’s economy and debt ratio,” he said.
“If this means that the debt-to-GDP ratio will be higher than 120 percent in 2020, we devise smart ways to rationalize, re-profile, or restructure the debt – keeping in mind the aim of maximizing the effective present value that will be returned to Greece’s creditors,” he said.
Varoufakis said Greece’s approach was not just negotiating tactics but a genuine long-term view. “Our task is to convince our partners that our undertakings are strategic, rather than tactical, and that our logic is sound,” he said.