Greek Finance Minister Yanis Varoufakis said that Greece is determined to remain in the eurozone, as concerns swirl over a possible debt default and departure from the bloc.
Asked in a Washington forum what Greece is doing in talks with official creditors to avoid “Grexit” – exit from the eurozone – Varoufakis said his government refuses to consider that option.
“Toying with Grexit … is profoundly anti-European,” he said at the Brookings Institution.
With the clock ticking in EU negotiations for another €7.2 billion US$7.8 billion) to keep the Athens government afloat, “Our only rational pro-European response is to spend every waking hour… trying to reach an honorable agreement,” he said.
But Varoufakis stressed as well that the country’s bailout lenders – the European Commission, European Central Bank, and the International Monetary Fund – need to give some ground on their demands for reforms, and recognize that the previous bailout approach of deep austerity had failed.
“We’ve tried that medicine but it hasn’t worked,” he said. “We will compromise, we will compromise and we will compromise in order to come to a speedy agreement, but we are not going to be compromised.”
The EU has set an Apr 24 deadline to come to agreement in principle with Athens over terms for a new loan that would allow the country to make key debt payments to the IMF and ECB over the next two months.
Varoufakis was not specific about the issues that are holding up a deal, but said the two sides share “a great deal” of common ground.
But he admitted that government funds are drying up in the current impasse, sparking market fears of an impending default. “The longer these negotiations go on, the greater the asphyxiation of our economy.”
“The negotiation must succeed,” he added. “It will be such a shame that this agreement is not concluded in the next few days, weeks.”
Earlier International Monetary Fund Managing Director Christine Lagarde warned that she wouldn’t let Greece skip a debt payment to the lender, shutting down a potential avenue to buy the Greek government some financial leeway.”We never had an advanced economy actually asking for that kind of thing, delayed payment,” Lagarde said in an interview in Washington with Bloomberg Television.
“And I very much hope that this is not the case with Greece. I would certainly, for myself, not support it.”Greek officials told their creditors earlier this month that they might run out of money and miss a repayment to the IMF, according to three people familiar with the negotiations. The payment went through, and Greece’s warning was seen as just an element of the ongoing discussion, one of the participating officials said.Greece must pay the IMF roughly $US1 billion next month. Missing a payment would put Greece in a club that includes Zimbabwe, Somalia and Sudan, countries that hold the dubious distinction of having fallen into arrears with the fund. Lagarde said the IMF hasn’t allowed a country to delay a debt payment in 30 years.At the same time, a skipped payment to an official creditor wouldn’t constitute a trigger to lower Greece’s rating to selective default under Standard & Poor’s criteria, the rating agency said Wednesday as it cut Greece’s rating to CCC+.Greek bonds plunged Thursday, pushing the yield on notes due in 2017 to the most since the height of the euro-area debt crisis in 2012, amid speculation the country won’t secure the release of aid needed to meet its obligations.