By Judith Ugwumadu | 3 February 2015
Greece’s new Syriza-led government has put forward a plan to restructure the country’s debt so that some of the interest payments are linked to growth bonds.
Finance minister Yanis Varoufakis unveiled his ‘smart engineering’ plan yesterday as he went to meet UK Chancellor George Osborne.
It has been suggested that the bonds would replace some of the debt held by European partners, who would only be paid if the Greek economy was growing. Perpetual bonds would also be used to replace debt currently held by the European Central Bank.
Last month the newly elected government promised to re-negotiate the €240bn bailout deal with the ‘troika’ of the European Union, the ECB and the International Monetary Fund. It also pledged to increase public spending and raise the minimum wage.
Varoufakis has no plans to write-off any of the foreign debt owned by Greece, he told the Financial Times. He has simply outlined plans to lift some of the burden of repaying it.
‘What I’ll say to our partners is we are putting together a combination of primary budget surplus and a reform agenda,’ he told the newspaper.
‘I’ll say, “Help us to reform our country and give us some fiscal space to do this, otherwise we shall continue to suffocate and become a deformed rather than a reformed Greece”.’
The finance minister added that he would target wealthy Greeks who have not paid taxes during the country’s six-year economic slump. He also said he wanted to deliver a primary budget surplus (after interest payments) of between 1% and 1.5% even if it meant Syriza would not fulfil the pledges it was elected on. It had originally pledged a surplus of 4.5%.
According to Varoufakis, Greece would continue with its plans of re-employing thousands of public-sector workers who were let go during the austerity period, adding that the lay offs were not ‘efficient’.
‘Our mandate gives us a right to do one thing – to have a few short weeks to propose our own ideas to the ECB, the eurozone partners and the IMF,’ the minister continued.
‘The notion that previous Greek governments signed on the dotted line on programmes that haven’t worked, and that we should be obliged to just follow that line unswervingly, is a challenge to democracy.’
