Greece's finance minister yesterday hinted he had a solution to the struggling country’s looming debt crisis and expected a deal with creditors to be struck within days.
Yanis Varoufakis unveiled a radical plan to restructure Greece’s debt as he went for talks at Downing Street and the City. He has no plans to write any of the debt off, but wants a restructure so that some of the debt interest payments are linked to growth.
Other parts of the debt would be made up of perpetual bonds – bonds on which interest could potentially be paid indefinitely. However, under this arrangement, Greece would never be actually required to have to repay its debt, only to pay the interest on it.
Varoufakis yesterday sounded confident, saying he expects a deal on Greek debt renegotiations to be struck within days. “There will be a deal in a very short space of time...that settles the Greek issue once and for all,” he said in a TV interview.
His remarks came after a meeting with chancellor George Osborne which Varoufakis called “a breath of fresh air.”
Osborne urged Varoufakis to act “responsibly”.
“It’s clear that the standoff between Greece and the Eurozone is fast becoming the biggest risk to the global economy, and it’s a rising threat to our economy at home,” Osborne said.
Varoufakis told the Financial Times that Athens would target wealthy tax-evaders and post primary budget (not accounting for debt interest) surpluses of 1 to 1.5 per cent instead of 4.5 per cent, even if it meant his Syriza party could not fulfil the pledges they were elected on. After his meeting with the chancellor he met with over 100 city investors.
“This is a strange kind of alliance that we’re forging here tonight between the left wing government and the financial sector – odd bedfellows in the middle of a depression,” the finance minister said. He said the alliance made sense, as policies that benefit the population would also raise asset prices.