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ESM Chief: Varoufakis' Term Cost Greece €100 Bln

baroufakispoukamisoThe Yanis Varoufakis period cost the Greek economy about 100 billion euros, said the President of the European Stability Mechanism, Klaus Regling on Wednesday.
The euro zone rescue fund managing director gave an interview on Skai television during his visit in Athens. He reiterated the creditors’ position that the Greek government should take ownership of the proposed reforms and adhere to the bailout agreement requirements.
Regarding the harsh reforms and measures that need to be taken before the second bailout program review in September, Regling admitted that passing harsh labor laws is very difficult and mentioned France and Italy where there were strong social reactions when unpopular bills passed. However, he said, labor reforms are unavoidable and gave the example of Germany where similar reforms reduced unemployment significantly.
The ESM chief pointed out that not all members of the Greek government seem committed to the bailout program requirements, and specifically on the issues of privatizations and the independent privatization fund. He mentioned the privatization of the Piraeus Port and the increase in business and revenue the particular action brought.
On the issue of the differences between European institutions and the International Monetary Fund over the Greek debt and primary surplus targets, he said the differences are there, but Greece’s bailout is a special case and cannot be viewed based strictly on IMF policies. He said that the ESM lends Greece with interest rates below 1% and will be supporting Greece in the long term, something that differs greatly from IMF policies.
When asked about the “cost” of the Varoufakis period in the finance ministry and his negotiation strategies of last year, Regling said that it is difficult to estimate. However, he said, given a IMF report on December 2014, it was estimated that the growth rate would be 2.5% in 2015 and 3.5% in 2016, a total of 6%. Since instead of growth there was recession in 2015 and 2016, the total 6% of lost GDP is approximately 100 billion euros.
Overall, the ESM managing director said, during the first months of the government with Varoufakis in the finance ministry, the cooperation between Greece and creditors was not good, the reforms stopped, and that was to the detriment of the Greek economy.

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