After Greeks voted a clear “no” to a bailout, they now face a very unclear future as Europe and the rest of the world awaits a new proposal from the Greek government. In the midst of this, Greece’s Finance Minister Yanis Varoufakis has decided to step down from his post and has not been shy to explain the reason behind his resignation.
In a statement he made on the Greece Ministry of Finance website and his very own blog (in an entry entitled “Minister No More!”), he said, “Soon after the announcement of the referendum results, I was made aware of a certain ‘preference’ by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.”
Nonetheless, he remains to supportive of the recent referendum and Prime Minister Alexis Tsipras. He stated, “I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum.” And then, he added, “I shall wear the creditors’ loathing with pride.” Meanwhile, the BBC has learned that Euclid Tsakalotos has been named Greece’s new Finance Minister.
Following the referendum, Tsipras issued a statement saying, “We are prepared to continue negotiating. With a credible financing plan. With a credible reform plan that will have the support of Greek society. With social justice criteria and the transfer of burdens from the weak to the financially strong. And with a credible plan that will foster growth and investments, in cooperation with the European Commission.” Furthermore, he added, “Now, too, the issue of our debt will be on the negotiating table in light of the IMF’s recent report on its sustainability.”
Tsipras also said that the said report was only introduced to him very recently and he believes that this report “confirms the Greek position that debt restructuring is necessary to reach a final sustainable solution to end the crisis, both for Greece and for the Europe.”
Tsipras may well have gotten this idea from a Preliminary Draft Debt Sustainability Analysis recently released by the International Monetary Fund (IMF).
In the 23-page report, the IMF stated, “To ensure that debt is sustainable with high probability, Greek policies will need to come back on track but also, at a minimum, the maturities of existing European loans will need to be extended significantly while new European financing to meet financing needs over the coming years will need to be provided on similar concessional terms.”
Nonetheless, IMF has also stated that should Greece be unable to pay in 12 months, the IMF Executive Board has the power to declare the country as “noncooperative,” possibly following some tough sanctions including suspension of technical assistance, voting rights along with a possible compulsory withdrawal from the IMF. Just the same, IMF Managing Director Christine Lagarde has said, “The IMF has taken note of yesterday’s referendum held in Greece. We are monitoring the situation closely and stand ready to assist Greece if requested to do so.”
Meanwhile, New York Times reports that Greece has another deadline to worry about as they will owe the European Central Bank (ECB) €3.5 billion by late July. In the wake of recent events though, the ECB has stated that it has “decided to maintain the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on 26 June 2015.” This comes after they had discussed a proposal from the Bank of Greece.
BBC has learned that Eurozone finance ministers will be meeting on Tuesday. This will also be followed by a full of summit among Eurozone leaders. Ahead of the said meeting, German Chancellor Angela Merkel has stated, “It will be important tomorrow that the Greek prime minister tells us how things should proceed and what precise suggestions he can submit to us for a medium-term programme that will lead Greece to prosperity and growth again.”
Meanwhile, French President François Hollande has also stated, “It is now up to the government of Alexis Tsipras to make serious, credible proposals so that this willingness to stay in the eurozone can translate into a lasting programme.”