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Greece says no to concessions to creditors

Article By: ,  Financial Analyst
May 8, 2015 6:26 PM

The Greek government says it will not make concessions in negotiations with creditors – instead, it will stick to the "red line" promises made to the electorate.

Talks are currently underway between government officials, the International Money Fund (IMF) and the European Union – and will continue over the weekend. Creditors are demanding that Greece cut spending if the country is to continue receiving loans - this includes plans to trim the civil service and privatise state assets. 

These demands go against promises made by the Syriza party when it was voted in earlier this year. The BBC reports that party leader Alexis Tsipras wants to ease up on austerity measures by increasing the minimum wage and establishing a job creation programme.

Speaking to the press in Athens, spokesman Gabriel Sakellaridis explained that issues like labour and pensions were non-negotiable.

"We won't go beyond the limits of our red lines. It's clear that we cannot cut pensions," he said.

Eurozone reaction

Some question if a Grexit - a Greek exit from the EU – be the next step, but president of the European Commission, Jean-Claude Junker, says this would not be a wise decision. "If I were to say that Grexit was an option, what do you think would happen to the financial markets?" he said.

French finance minister Michael Sapin called for a "push towards a compromise".

During a gathering of eurozone finance ministers on Monday (May 4th), he said: "The risk of things running off the rails for Greece also entails that risk for Europe.

Next payment

Greece's next payment to the IMF is due on Tuesday (May 12th). At €763 million (£566 million), it will be one of the largest payments so far.

Yanis Varoufakis, the Greek finance minister, has said that the country would meet the deadline.

He admitted to the BBC that "The Greek government used to pretend it could meet certain targets that it knew it could not keep."

However, he said that old cycle of debt deflation and insincerity needs to come to an end if a solution is to be reached. "We are prepared to go all the way down to the wire," he explained.

Mr Varoufakis believes an agreement should be reached in the next couple of weeks.

"Europe works in glacial ways, and eventually does the right thing after it has tried all alternatives," he said.

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