The next few months will decide the country’s fate for decades to come, Prime Minister Lucas Papademos told Greeks in his New Year’s message.
“The next three months will be especially crucial,” said Papademos. “The decisions that will be taken will decide Greece’s course for the next decades.”
The government is looking at a tight schedule until March, when Greece will face bond redemptions of 14.5 billion euros. In order to pay investors, Athens will have to borrow the money from its eurozone partners and the International Monetary Fund, as part of the 130-billion-euro bailout package that is currently being discussed.
However, to secure more emergency loans, Greece will have to achieve an agreement with private bondholders to accept at least a 50 percent haircut and to convince the EU and the IMF that it is progressing with the structural reforms it has promised.
Papademos said that the efforts made by Greece in 2011 to improve its public finances would have to continue apace this year. “We must continue our efforts with decisiveness, to stay in the euro, to make sure we do not waste the sacrifices and do not turn the crisis into an uncontrolled and disastrous bankruptcy.
“We will defend our position in Europe. The euro is our currency. The Europe of developed countries is our common home.”
Papademos’s comments came as IMF sources warned that the 50 percent haircut being negotiated by the interim government would not be enough. Sources at the Washington-based fund told Sunday’s Kathimerini that a number of alternatives, including a bigger writedown, are being examined. Other options include a purchase by the European Central Bank of Greek bonds on the secondary market or better terms on eurozone loans for Greece.
On top of this, Papademos’s government must also set out fiscal measures worth an extra 2 billion. It also has to make further cuts to pensions, benefits and public sector staff, as well as completing an overhaul of the country’s taxation system. EU and IMF officials are due in Athens on January 16 for their latest inspection on Greece’s progress.
Papademos found an ally yesterday in President Karolos Papoulias, who suggested that criticism of his government was sometimes excessive. “They are battling him,” he told journalists. “I see it in some newspapers through comments that it would be best to avoid making since we are all asking for more money from the Europeans.”
