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Stournaras Fears Unrest Could Undo Reforms

Greek Finance Minister Yiannis Stournaras
Greek Finance Minister Yiannis Stournaras

With international aid beginning to pour in gradually, Greek Finance Minister Yiannis Stournaras said he’s worried that growing political and social unrest could undermine Greece’s slow recovery and even lead to bankruptcy unless the government resists.
In an interview with the Reuters news agency, Stournaras, who designed a reform plan for Prime Minister Antonis Samaras that sticks to the austerity line demanded by lenders, said he’s still anxious about protests and strikes and political opponents who don’t support pay cuts, tax hikes, slashed pensions and big increases in utility bills.
“What scares me is the big pressure from society, media and parliamentary deputies from all parties to ease the program. We must resist … it’s too early to declare victory,” he said.
Greece’s partners in the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) have praised Samaras for following their orders to the letter after he initially opposed austerity.
Stournaras said that will begin to pay off for Greece in the years to come even if Greeks buried under austerity and a record 26.8 percent unemployment can’t see it and are impatient as their lives crumble. Demands are growing on the uneasy coalition that Samaras, the New Democracy Conservative leader, oversees with his partners, the PASOK Socialists and Democratic Left, who abandoned party principles to join the government.
Stournaras, who served as chief economist for the socialist government that brought Greece into the single currency in 2001, said people must show patience and solidarity for one more year. “We are facing a huge crisis, we have not yet left the hot zone of bankruptcy,” he said. “We are doing better but we can’t say that we have escaped all danger. The year 2013 will determine whether we will.”
Stouraras said that money is returning to Greek banks, bond prices are rising and the 2013 primary budget will do better than the Troika predicted for the year, registering a 0.4 percent surplus, despite a crippling recession that is expected to shrink the economy 4.35 percent.
“The primary deficit is what we are judged on. The Troika expects it at zero but we believe we will do slightly better,” he said. “This means that there is a good chance our partners may further reduce our debt.”
The interview came the day after the IMF agreed to pay its next installment of 3.24 billion euros ($4.32 billion) although the agency’s head, Christine Lagarde, reiterated Greece must find a way to grow its way out of the crisis instead of relying on loans.
He acknowledged that unemployment would take longer to start declining and only after the economy starts to grow, which is expected in late 2013. “Unemployment is our big thorn,” he said. “There is a time lag between GDP growth and unemployment decreasing and it’s a serious problem, both economic and social.” The jobless rate has been worsened by austerity
He also said Greece expects to meet this year’s privatization revenue target of 2.6 billion euros ($3.4 billion,) with investor interest coming mainly from China and Russia for state companies going on the block, including natural gas distributor DEPA and gambling firm OPAP, Stournaras said. All previous goals have failed.
The government must also deal with the distraction of burgeoning scandals over a list of Greeks with secret accounts in a Swiss bank that still hasn’t been checked for tax evasion for more than two years and at the country’s national tourism agency, where five people have been arrested in a scheme to plunder the body and where some 12 million euros ($16 million) is missing. Another big bugaboo, he has previously admitted, has been the failure of the government to go after tax cheats who owe more than $70 billion.
He said the government would stand together even though the coalition has lost 15 of its previous 179 seats in the 300-member Parliament to defections and ejections of lawmakers who refused orders to vote the way they were ordered to by their parties. “I will not be the one to destroy what we have achieved with sweat and tears in the last six months,” he said. “Credibility is very hard to build and easy to lose.”

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