ATHENS – If Prime Minister Antonis Samaras wins the critical Jan. 25 elections, Greece will ask for a lower fixed rate for its debt, Finance Minister Gikas Hardouvelis said.
With the country’s debt at 170 percent of Gross Domestic Product (GDP) Hardouvelis said the country can no longer withstand a floating interest rate to which it had agreed in getting 240 billion euros ($306 billion) from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB).
If the current government remains in power after the January 25 elections it would negotiate for part of Greece’s debt, currently at around 170 percent of GDP, to be transformed from a floating to a fixed rate, Finance Minister Gikas Hardouvelis said on Monday night.
But if SYRIZA were to win, it should ask for an extension to the country’s bailout deal with its creditors, which is due to expire on Feb. 28, he said.
Speaking on Bloomberg Television, Hardouvelis stressed that the government has “everything under control” and would be in a position to strike a deal on principle before the February Eurogroup meeting. He didn’t explain why it didn’t do so before.
“I think the bureaucracy will be able to move fast after that and close the deal,” he told Bloomberg’s Elliott Gotkine, a stance opposite to what the Troika had complained was government foot-dragging on reforms.
If, however, the leftist opposition, which has been leading in opinion polls, wins the snap polls in two weeks’ time, it would be “prudent for them to ask for an extension so it will give them some time to manage the negotiations and close the review,” Hardouvelis said, arguing that “they do not have the knowledge and the experience in negotiations, and they have certain ideas of their own.”
“I think definitely that 2015 is different from 2012. Europe has built defenses against a country leaving the euro area, so Greek politicians understand this, they understand they cannot threaten the rest with their own exit. So this is not a bargaining chip on our side,” Hardouvelis said.
That was a reference to suggestions that a SYRIZA government would suspend all payments, potentially putting Greece’s Eurozone membership at risk.
“What we have to do is, instead of asking for a haircut, which is not acceptable to the European partners that gave us the loan, we ought to ask for an extension that will give us a lot of breathing space for the economy to grow. We ought to ask for transforming the floating-rate debt into a a fixed-rate debt. In other words, take advantage of the availability of liquidity and transform some of that floating rate into a fixed rate.”
Asked what keeps him awake at night, Hardouvelis said, “Nothing keeps me awake. Because we have things under control.”