ATHENS – Ratings agencies sneered at Greek Finance Minister Euclid Tsakalotos’ claim that a precautionary credit line as the country exits international bailouts would have a negative effect and as he claimed Greeks don’t pay high taxes despite an avalanche of hikes and new levies imposed by the ruling Radical Left SYRIZA-led coalition.
Tsakalotos, a Marxist economist forced into embarrassing surrenders to the country’s lenders, the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) and the Washington, D.C.-based International Monetary Fund (IMF) rejected Bank of Greece Governor Yannis Stournaras’ call for a credit line.
Three rescue packages of 326 billion euros ($385.6 billion) will run out on August 20, leaving Greece to the mercy of the markets and years of having its economy monitored by the creditors to prevent backsliding on agreed reforms and austerity after Tsipras reneged on promises to reverse brutal pay cuts, tax hikes, slashed pensions and worker firings.
Two test bond sales of 3 billion euros ($3.55 billion) were floated successfully but at interest rates more than three times higher than the bailouts, which will take decades to repay at the same time Tsipras is seeking debt relief.
Ratings agencies contacted by the newspaper Kathimerini said they aren’t concerned whether there will be the so-called “Clean Exit” from the bailouts that Tsipras said will happen – Tsakalotos said it won’t – but the ongoing strict supervision from the lenders.
Kathimerini asked Moody’s, DBRS, Fitch and Standard & Poor’s whether resorting to a credit line would be a credit negative event for the country and prevent them from raising its bonds to investment grade and was told it wouldn’t, the paper reported.
Tsakalotos repeated, in an interview posted by Frankfurter Allgemeine Zeitung this week, that the government coalition of SYRIZA and its junior partner, the tiny, pro-austerity, marginal, jingoistic Independent Greeks (ANEL) will not ask for the precautionary credit line that Stournaras said is vital.
Disputing Tsipras, he said scrutiny will continue and even be enhanced. “In the case of Greece, supervision will possibly be more detailed,” he said, adding that once the country demonstrates its credibility, only fiscal goals will then be checked.
Referring to Greek taxes which SYRIZA pumped up vowing to cut them, he told the German newspaper that “In order to achieve a primary budget surplus we burdened, excessively, a portion of society. Now, however, we are creating fiscal margins to reduce burdens to these strata of society. Generally speaking, tax rates (in Greece) are not excessively high … there are now greater margins for tax breaks,” but he didn’t say who’ll get them.
Tsipras hasn’t fulfilled his promises to put a 75 percent tax on the rich, crush the oligarchy and hunt down tax cheats with many of Greece’s wealthy hiding their money in secret foreign bank accounts.