Greece will run out of money in mid-November and needs to receive a delayed $38.8 billion installment from its bailout package as soon as possible, Greek Prime Minister Antonis Samaras said on Oct. 19.
“On the 16th of November the country will run out of cash. We would like to receive the loan tranche immediately after the release of the Troika report,” Samaras told reporters here after the EU summit, referring to an eagerly-anticipated analysis by Greece’s lenders, the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB).
“We expect this to happen by the middle or end of November,” Samaras added, but he said the timing is critical because Greece could run out of money to pay its workers or pensioners without the welfare aid. Greece is locked out of private markets and almost totally dependent on the Troika for assistance.
Samaras said his uneasy coalition government is trying to proceed with a $17.45 billion spending cut and tax hike plan that has dragged down over disagreements over some of the harshest measures. Troika envoys are also disputing some of the savings projected by the government and other differences remain, including whether Greece should have more time to meet fiscal targets to reduce its deficit from 9.3 to 3 percent, the ceiling allowed by the Eurozone of the 17 countries which use the euro.
Also in flux is uncertainty over how much more aid Greece would need if more time is alloted and what a pending report from the Troika will show on the country’s progress. “All three are linked and there is still a difference of opinion,” Samaras said. The disagreement “is okay, as long as it doesn’t happen at our expense,” he stressed.
Commenting on the sentiment inside the EU summit meeting in Brussels – his first – Samaras said his colleagues all support him in his efforts to help right an economy crushed by $380 billion in debt and with little hopes of growth, and only relentless austerity being applied, which has caused massive resistance from Greeks.
“Sentiment is changing and you can see it in the (EU summit) communique on Greece,” he said. “It was a very positive statement. We can benefit from the decisions on bank recapitalization at the EU level, since that will allow us to write off the money spent (on Greek banks) from the (government’s) outstanding debt figure at some point.”
German Chancellor Angela Merkel refuted that when she said there will be no retroactive bank recapitalization by Europe’s new rescue fund, the European Stability Mechanism. Asked by MNI to comment on Merkel’s assertion, a top Greek Finance Ministry official predicted that, “Germany will come around in the end.” The EU stance towards Greece “has changed significantly,” Samaras said.
He added: “I want to address all those speaking about Greece’s exit from the Eurozone to say that this is no longer possible. But I have highlighted to my counterparts the problems we are facing from rising unemployment, the liquidity shortage and the ongoing recession.”
Samaras argued that economic growth needs to return to Greece, and he said he is lobbying his European counterparts so that the criteria for the allocation of EU funds are changed to fit Greece’s current needs.
“I explained to them that Greek society has reached its limits. Liquidity which is the blood of the economy, is now zero. Unemployment among the youth has reached a nightmare scenario. This is not Europe!” he exclaimed. “This is how extremists rise,” an apparent reference to the surge of the neo-Nazi Golden Dawn party in Greece into third place among the country’s political parties.
Samaras said he fully realized that the new austerity package “is very tough.” But “it is the last one,” he stressed, promising that no matter how tough conditions get in Greece, and if this package fails to slow Greece’s slide toward default, that he won’t impose another one. “I won’t be satisfied until we return to a growth path,” the Greek premier said. “Even (European Commission) President Jose Barroso, after my speech last night, said that Greece has reached the limits of fiscal discipline.”
Samaras appeared satisfied with the stance of French President Francois Hollande during the Summit, saying that Hollande’s input had helped shape a more positive communique on Greece. He noted that Hollande will visit Athens soon, as will Italian Prime Minister Mario Monti.
Asked how the question of Greece’s debt sustainability will be resolved, Samaras declined to answer. Many of Greece’s official creditors believe the current target of 120% of GDP by 2020 – a line in the sand for the IMF – is unattainable because it is near 180 percent now. How that dilemma is addressed will be a key aspect of the troika’s upcoming Debt Sustainability Assessment. “Allow me not to say anything else about it at this stage” the Greek premier said.