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Greek Fin Min: There Will Be No Credit Event

varoufakis-starThe Minister of Finances Yanis Varoufakis appeared on Star Channel on Monday, where he talked about the upcoming Eurogroup next Monday, where he will be presenting six reforms. These reforms will form the basis of discussion between Greece and its European partners.
In the interview Mr. Varoufakis stressed that Greece would pay its debts towards the IMF “on time” and explained that at present “we are in the process of securing the resources for the four-month extension.” He appeared confident that Greece would also pay back the ECB on time, in response to warnings from Germany of a “credit event” occurring, should Greece delay payments.
Mr. Varoufakis also dismissed the idea that returning to the drachma may be a solution, while commenting that SYRIZA MP Kostas Lapavitsas “has built his entire career upon the return to the drachma.” He also stressed that leaving the Eurozone is a “worse case scenario” and maintained that the only solution for Greece is to recover within the Eurozone. Nevertheless, he pointed out that unless the Eurozone changes its structure then Greece will not be able to overcome its problems and will need a “new European Deal.”
Regarding the recent Eurogroup agreement, the Finance Minister explained that the major gain was the separation of the loan agreement from the memorandum and promised that there will be no recessive measures to be taken in the next four moths. Due to this development, the Greek government is not bound by the “Hardouvelis email” list of reforms, which would see pensions slashed and VAT increased on the islands, in pursuit of a high primary surplus. Mr. Varoufakis also criticized his predecessor Gikas Hardouvelis for failing to negotiate a better deal.
Varoufakis appeared surprised when asked by STAR concerning the 8-10% salary increases in contracts at the Public Power Corporation that have already been signed. Appearing taken aback, he denied to comment unless properly informed of the matter.
Nonetheless he was prepared to give an outline of measures being discussed by the government, specifically referring to:
– measures worth 200 mln euros to deal with the humanitarian crisis using funds from Community programs and cutbacks to other spending
– Changes to VAT
– A settlement of regulation for 100 installments under discussion with partners
– “We are working towards a solution for those who paid their taxes on time,” he said
– “We are not making unilateral moves that would have serious fiscal repercussions over the next quarter,” he said
Varoufakis announced that the controversial single property tax ENFIA, that SYRIZA had criticized during its term in opposition, would continue to exist in April when the first installment for taxes in 2015 would begin. He said that “to change ENFIA could take 2-3 months. It is a patriotic duty to keep paying until the property tax law changes!” He did not clarify as to whether there will be a cancelling out of the installment already paid as a result of the outgoing ENFIA tax once it is replaced with the large-property FMAP tax.
The usually outspoken Varoufakis was tight-lipped when it came to VAT and appeared restrained in his response stating merely that he would like VAT to be 15-16% as opposed to 23%. He characterized VAT taxes generally as taxes that are ”silly, unfair and ineffective.”

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