By Alessandra Galloni MILAN Friday October 17, 2014
Greece's Prime Minister Antonis Samaras attends a parliament session before a confidence vote for the country's coalition government in Athens October 10, 2014. Credit: Reuters/Yorgos Karahalis
MILAN (Reuters) - Prime Minister Antonis Samaras said on Friday Greece would ride out market doubts about whether it can survive without international support, telling Reuters he can lead his country out of a four-year bailout and not call early elections.
Samaras said Athens was talking with its lenders about what should happen if Greece succeeds in leaving its bailout program by the end of December, a year ahead of schedule, as Greek officials hope.
He sees one option as a credit line that Athens could tap post-bailout should it fall prey to future market turmoil.
"We can now stand on our feet; we have the resources to come out of the program, and we are preparing ... in constructive cooperation with lenders for 'the next day', after we exit the program," Samaras said in an interview.
But the details of any such credit line have yet to be negotiated -- nor has Greece finished a review with its international lenders of the measures it has taken so far. It is far from clear whether lenders would offer funds without strict conditions for the country where the euro zone's sovereign debt crisis began in 2009.
Samaras has been eager to tell voters that the pain of budget cuts imposed by outsiders is over after six years of recession. He also said Greece would not hold snap elections next year, a possibility that has worried investors who fear political instability might undermine reform efforts.
"Elections will be held in June 2016, at the end of the four-year parliamentary term," said Samaras. "Our new president will be elected early next year," he added, referring to a parliamentary vote in early February to elect the president, or head of state.
The outcome of the presidential vote could, in turn, prompt an early national election, if Samaras does not get enough backing to push through his candidate. So far, Samaras' majority in parliament is well below that needed to win the vote, so he needs backing from opposition parties.
Samaras is gambling that an early bailout exit can revive his fortunes and lure independent lawmakers to his side.
The conservative prime minister was speaking after participating in a meeting of European and Asian leaders in Milan. During the summit, Samaras had conversations with European leaders including German Chancellor Angela Merkel.
Greece's economy, for years the weak link in Europe, is turning the corner after austerity measures imposed in exchange of 240 billion euros ($306 billion) in bailout funds. The bailout has been very unpopular, and Greeks say pension and salary cuts imposed by its International Monetary Fund and European Union lenders have impoverished the population.
But before it can leave the international bailout behind it, inspectors from the European Union and International Monetary Fund must return to Athens after the publication of the results from a euro zone-wide bank health check.
Greece's bank bailout fund has 11 billion euros in leftover money, which Athens can tap if it needs to cover any future funding shortfalls, Greek officials say.
But a three-day sell-off in the markets has again pushed Greece's 10-year bond yields past 9 per cent and sent shares tumbling to their lowest since July last year. Bond and share prices recovered somewhat on Friday, with 10-year yields falling to 8 per cent while the Athens stock index was up 7 per cent.
The government says it has no need for more money, including some 9 billion euros that the International Monetary Fund is to give it between January 2015 and March 2016. It therefore wants to quit the program early.
Yet political uncertainty, coupled with worries over Athens' ability to tap markets post-bailout, meant Greek assets took a particularly heavy battering in this week's rout, triggered by concerns over the global economy.
Greek officials have for weeks been talking with their lenders about the possibility of a credit line that would be extended post-bailout by euro zone partners to provide financial support in the case of unexpected events, according to people close to the Greek government.
Greece wants this to come without strict conditions, saying it has shown its commitment to economic reforms. Athens would prefer that the IMF were not party to such a credit line, partly to avoid further conditions, the sources said.
But while Greeks see the IMF as the main author of the austerity measures of the past few years, many international investors see the Fund as the guarantor of future Greek creditworthiness.
One of the scenarios for Greece would be an Enhanced Conditions Credit Line (EECL), from the European bailout fund.
But even this would come with conditions, allowing the euro zone to retain control the Samaras government doesn't want.
Greek officials are hoping that they can come to a compromise, with the government's own reform agenda as a guarantee of economic discipline, according to people close to the Greek government.
Samaras told Reuters Greece would stay on the path of "fiscal prudence and structural reforms ... as the ticket to economic growth".
He added: "We have already paid a high price as a country for past mistakes. Wouldn't it be totally unfair and contrary to any logic, if we had to pay a price again, only this time due to our success?"
(Editing by Ruth Pitchford)