Wednesday, July 18, 2012

Samaras’s challenge

Financial Times
July 18, 2012

Just a month after fulfilling his life-long ambition to become Greece’s prime minister, Antonis Samaras is facing his first huge political test. Next week international lenders will visit Athens to help Greece get back on track with its fiscal consolidation effort. Unless the government satisfies the troika’s demands, its creditors may decide against unlocking the €31bn in loan disbursements needed to recapitalise Greece’s banks and pay back some of its earlier debts.

It is sensible that Mr Samaras has decided to resist the temptation to seek a renegotiation of the terms some of his allies were asking for. The EU and International Monetary Fund have shown no appetite for this. Furthermore, any concessions Athens may want to request in future will be received favourably only if it re-establishes credibility in the current round of talks.

Much credit for the decision to put on hold the demands for a renegotiation goes to Yannis Stournaras, Greece’s technocrat finance minister. So far Mr Stournaras has shown himself willing to speak truth to his political bosses. This is a welcome change for a country still suffering from the consequences of years of economic misrepresentation.

Greece needs to find €11.5bn worth of savings for the period 2013-4. About €8bn has already been identified and is reported to include a pension ceiling and cuts to the rewards of the executives of public sector corporations.


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