Greece’s creditors have said no to calls from the country’s new conservative government to ease harsh budget conditions agreed as part of its rescue program, AP reports.
New Democracy leader and Greece’s new Prime Minister Kyriakos Mitsotakis was elected after pledging that he will cut taxes and renegotiate with international creditors the rescue program prerequisites.
However, eurozone finance ministers who convened in Brussels on Monday said key targets already agreed with Athens would not be changed, according to AP.
“Commitments are commitments, and if we break them, credibility is the first thing to fall apart. That brings about a lack of confidence and investment,” Mario Centeno, the Eurogroup president, told reporters after the meeting.
Athens has pledged to achieve government budget surpluses, before debt costs, of 3.5 percent of GDP for the coming years. That condition has curbed government spending and, consequently, stifled the country’s economic recovery.
Klaus Regling, head of the European Stability Mechanism (ESM), Greece’s main lender, said the high surplus target would remain a key condition.
“It’s very hard to see how debt sustainability can be achieved without it,” he said. “The 3.5 percent surplus is a cornerstone of the program. It was a cornerstone of the program from the beginning.”
Mitsotakis has promised to make Greece more investment-friendly by lowering taxes and cutting red tape. But his new government faces pressing financial challenges, including a national debt that exceeds 180 percent of GDP and banks suffering from non-performing loans.
Analysts say that regardless of the budget hurdles, Mitsotakis will pursue his plan to lure investors and support businesses.