ATHENS, Greece — Greece intends to start discussions with its creditors on debt rescheduling in order to make the country’s massive debt sustainable, at the same time as working on reform measures that need to be cemented by April, the finance minister said Saturday.
In an interview with The Associated Press, Yanis Varoufakis also said Athens will prioritize debt repayments to the International Monetary Fund, some of which come due in March, but that repayments to the European Central Bank are “in a different league” and will need discussion with Greece’s creditors.
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“The IMF repayments of course we are going to prioritize, we are not going to be the first country not to meet our obligations to the IMF,” Varoufakis said in his office in the Finance Ministry. “We shall squeeze blood out of stone if we need to do this on our own, and we shall do it.”
However, “the ECB repayments are in a different league and we shall have to determine this in association with our partners and the institutions.”
Greece faces IMF repayments in March of about $1.69 billion, and about $7.5 billion to the ECB in the summer. But it is facing a cash crunch and will struggle with scheduled repayment of its debts.
Athens wouldn’t ask for a delay in repayment in its ECB obligations, the minister noted, but rather something that would make the repayments easier to achieve.
“I do not believe the ECB would accept a delay, but what we can do is we can package a deal that makes these repayments palatable and reasonably doable as part of our overall negotiation regarding the Greek debt, and the next … contract for growth for the Greek economy between us and the partners.”
Last week, Greece won a four-month extension to its $270 billion international loan agreement earlier this month in a deal with the other members of the 19-nation eurozone. In return, Athens has pledged a series of budget reforms, which for now contain no details but will have to be turned into concrete measures by April.
Those measures, Varoufakis said, were Greece’s priority, but tackling the country’s oversize debt was also necessary.
“The April agreement concerns reforms. And this is our imperative. Our imperative is to reform this country,” the minister said.
“At the same time, and independently of the April agreement … we intend to begin the conversation with our partners and institutions regarding debt sustainability and debt rescheduling.”
For this, Athens will make proposals with the aim of helping nominal gross domestic product grow and to maximize its repayments in real terms, Varoufakis said.
“We will be proposing a menu of swaps between new instruments, new public financially engineered instruments and segments of our debt.”
Greece’s debt currently stands at $354 billion, or 176 percent of GDP – a level many say is unsustainable and can never be paid back in full.
The new left-wing government was elected on Jan. 25 on promises of canceling the austerity measures that accompanied Greece’s international bailout and seeking forgiveness for most of the country’s debt.
But to win the agreement for Greece’s four-month loan extension, the country committed to honoring its financial obligations “fully and timely.”
The agreement also stipulates Athens won’t receive any of the pending 7.5 billion euros in the last bailout installment it is due until it submits all its reforms and passes a review by its creditors.
This has left the country’s coffers close to running dry.
“It would be excellent if we could agree with our partners to smooth over this cash flow hump that we’re facing over the next few months for the benefits of everyone,” Varoufakis said. “But for us, the prerequisite is that we reboot our economic policy in Greece, in conjunction with the institutions and our partners, so as to make sure that this financing of the cash flow problem is not done at the expense of long-term sustainability.”
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