Greece Pays Public Sector Wages to Avert Fresh Economic Crisis
Nick Fletcher
Friday 15 May 2015 13.59 EDT Last modified on Friday 15 May 2015 19.09 EDT
Greece avoided another financial crisis by paying about €500m (£360m) in wages to public sector workers, but suffered another downgrade of its credit rating.
“The mid-May payments of wages and pensions ... were made within the scheduled time frame,” the finance ministry said. They had been due on Friday.
The payment came as Greece remained locked in talks with its creditors in an effort to release €7.2bn of bailout funds to avoid a default and exit from the eurozone.
In a sign the leftist Syriza government was preparing to compromise over some of the reforms demanded by Brussels and the International Monetary Fund, it said it would push ahead with privatisation of its biggest port, Piraeus. It is in talks with China’s Cosco Group, which manages two container piers at the port, about selling a majority stake.
“We are in very advanced talks to expand this cooperation very soon in relation with the inclusion of a railway network as well,” the defence minister, Panos Kammenos, told an economic conference in Athens.
The Greek prime minister, Alexis Tsipras, said his country was “very close” to reaching a vital deal with bailout lenders, but insisted there was “no possibility” of giving in to key demands including further cuts to pensions and wages.
Tsipras said the government had not abandoned its goal to try to persuade lenders to restructure Greece’s debt.
“It appears that we have reached common ground with the institutions on a number of issues, and that makes us optimistic that we are really very close to an agreement,” Tsipras said, noting convergence on harmonised sales tax rates and tax administration reforms.
“But several issues remain open ... I want to reassure the Greek people that there is no chance or possibility for the Greek government to retreat on the issue of wages and pensions. Wage earners and pensioners have suffered enough.”
Earlier in the week, Greece paid $750m due to the IMF, albeit by using a reserve account held at the IMF itself, while the European Central Bank raised the level of emergency funding for Greek banks by €1.1bn to €80bn.
Athens has also called for its embassies and consulates to forward any cash reserves in an effort to avoid running out of funds before a deal with creditors is reached. But it ran into a setback when the parliamentary speaker refused to transfer Hellenic parliament cash to the state.
Meanwhile, DBRS ratings agency downgraded Greece further into junk status, cutting it from B to CCC with a negative outlook.
“The current downgrade is due to a further increase in uncertainty over whether Greece and its creditors will reach an agreement on a programme that restores macroeconomic stability and improves Greece’s cash position,” it said. “In the absence of an agreement, financing sources appear to be insufficient to meet Greece’s financing needs over the foreseeable future.”
Tsipras reportedly plans to press fellow European leaders about the bailout deadlock on the sidelines of a summit in Latvia next week.
Friday 15 May 2015 13.59 EDT Last modified on Friday 15 May 2015 19.09 EDT
Greece avoided another financial crisis by paying about €500m (£360m) in wages to public sector workers, but suffered another downgrade of its credit rating.
“The mid-May payments of wages and pensions ... were made within the scheduled time frame,” the finance ministry said. They had been due on Friday.
The payment came as Greece remained locked in talks with its creditors in an effort to release €7.2bn of bailout funds to avoid a default and exit from the eurozone.
In a sign the leftist Syriza government was preparing to compromise over some of the reforms demanded by Brussels and the International Monetary Fund, it said it would push ahead with privatisation of its biggest port, Piraeus. It is in talks with China’s Cosco Group, which manages two container piers at the port, about selling a majority stake.
“We are in very advanced talks to expand this cooperation very soon in relation with the inclusion of a railway network as well,” the defence minister, Panos Kammenos, told an economic conference in Athens.
The Greek prime minister, Alexis Tsipras, said his country was “very close” to reaching a vital deal with bailout lenders, but insisted there was “no possibility” of giving in to key demands including further cuts to pensions and wages.
Tsipras said the government had not abandoned its goal to try to persuade lenders to restructure Greece’s debt.
“It appears that we have reached common ground with the institutions on a number of issues, and that makes us optimistic that we are really very close to an agreement,” Tsipras said, noting convergence on harmonised sales tax rates and tax administration reforms.
“But several issues remain open ... I want to reassure the Greek people that there is no chance or possibility for the Greek government to retreat on the issue of wages and pensions. Wage earners and pensioners have suffered enough.”
Earlier in the week, Greece paid $750m due to the IMF, albeit by using a reserve account held at the IMF itself, while the European Central Bank raised the level of emergency funding for Greek banks by €1.1bn to €80bn.
Athens has also called for its embassies and consulates to forward any cash reserves in an effort to avoid running out of funds before a deal with creditors is reached. But it ran into a setback when the parliamentary speaker refused to transfer Hellenic parliament cash to the state.
Meanwhile, DBRS ratings agency downgraded Greece further into junk status, cutting it from B to CCC with a negative outlook.
“The current downgrade is due to a further increase in uncertainty over whether Greece and its creditors will reach an agreement on a programme that restores macroeconomic stability and improves Greece’s cash position,” it said. “In the absence of an agreement, financing sources appear to be insufficient to meet Greece’s financing needs over the foreseeable future.”
Tsipras reportedly plans to press fellow European leaders about the bailout deadlock on the sidelines of a summit in Latvia next week.
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