Helena Smith in Athens Wednesday 15 April 2015
Eurozone finance ministers to pass judgment next week on reform-for-cash deal that would unlock €7.2bn (£5.2bn) of financial assistance
Greek finance minister, Yanis Varoufakis , drives his motorcycle with deputy foreign minister for international economic relations, Euclid Tsakalotos riding pillion. Photograph: Petros Giannakouris/AP
Greece has vigorously rebutted speculation that it will declare a debt default and plunge out of the Eurozone if it fails to strike a deal with lenders to keep its bankrupt economy afloat.
Acknowledging that the Syriza-led anti-austerity government had faced the “teething problems” of any administration new to power, the minister tasked with overseeing the country’s international economic relations expressed confidence that a deal with creditors would be reached even if negotiations went to the wire.
“I can assure you we are working flat out for the good scenario,” said deputy foreign minister Euclid Tsakalotos. “I am absolutely confident an agreement will be reached on 24 April. Deals are always done five or three or one minute before midnight, it’s not unusual that they should go right to the brink.”
In what is widely seen as a make-or-break date for the debt-stricken nation, Eurozone finance ministers have said they will pass judgment on the reform package Athens has been told to submit next week when they gather in the Latvian capital, Riga, on 24 April.
With the country facing a series of debt repayments in May and June – when its existing bailout agreement ends – and the Greek economy forced to survive on emergency funding from the European Central Bank, failure to endorse the proposals could spell disaster for the continent’s most indebted state.
The reform-for-cash deal, an interim accord before Greece signs up to an anticipated third bailout later this year, would unlock €7.2bn (£5.2bn) in financial assistance withheld since August as Athens has argued with creditors at the European Union, ECB and International Monetary Fund over the extent of austerity measures required to release aid.
In the 10 weeks since prime minister Alexis Tsipras assumed power, the state of the economy has become ever more perilous as the government has struggled to meet debt obligations and keep up with public sector pensions and salaries while surviving on ever-waning reserves of credit.
On Monday, the Financial Times reported that Greece was poised to take the dramatic step of declaring a debt default – a move that would almost certainly lead to the closure of Greek banks and imposition of capital controls – citing an unnamed official as saying the cash-starved country had “reached the end of the road”.
But Tsakalotos, an Oxford-educated economics professor catapulted into office with Tsipras’ far-left Syriza party, hit back, saying the criticism was wholly unfair. Many of the reports emanated from Germany, the main provider of Greece’s €240bn bailout programme, and other countries that took an equally tough line on austerity.
“There are some teething problems that one might expect from a young government without experience but we are concerned that there is quite a bit of unfair criticism about the preparedness of the Greek government and its ability to provide details on its ambitious reform programme,” he said.
A deal would be reached if creditors did not continue to insist on the new administration implementing reforms that even the previous pro-bailout premier, Antonis Samaras, found impossible to enforce. “And I don’t think they will do that,” said Tsakalotos, adding that despite all the criticism the leftists were avowedly pro-European. “This is a government that is systemically pro-European, not just tactically pro-European and that’s because we believe that the break-up of the euro will lead to right-wing nationalism and competitive devaluation, a straight re-run of the 1930s that no progressive person would want.”