Greece finance minister vows compromise in loan talks

AP News
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Posted: Apr 16, 2015 6:41 PM

WASHINGTON (AP) — Greek Finance Minister Yanis Varoufakis promised Thursday to compromise in negotiations over the next installment of a bailout loan that would prevent a default on the country's debts.

Yet Varoufakis also denounced some of the reforms demanded by the country's European creditors, suggesting the two sides remain far apart. Speaking at the Brookings Institution, he said his government was elected to "challenge the logic of a program that has clearly failed."

His comments came as Greece's borrowing costs soared amid growing fears of a debt default.

Greece is shuffling funds among government agencies and delaying payments to suppliers to repay its loans. Greek officials hope that an agreement can be reached next week, but officials from Germany and other European nations have suggested that's unlikely.

German Finance Minister Wolfgang Schaeuble also spoke at Brookings and gave no sign of backing down from his hard-line stance that Greece must agree to sweeping economic reforms.

European Union spokesman Margaritis Schinas said that "we are not satisfied with the level of progress made so far."

Varoufakis acknowledged that Greece's economy requires "urgent and extensive" reforms but challenged measures favored by Germany and other creditors, such as pension cuts, faster privatization of state-owned companies, and changes to employment rules to make it easier to fire workers.

Previous efforts by Greek's government to privatize publicly owned companies were "disasters," Varoufakis said, because the prices of such assets had fallen "through the floor" and did little to offset the country's debt.

"We're not against privatization," he said. "We're against this kind of fire sale."

Yet Varoufakis insisted his government would seek swift agreement.

"The answer is simple: We will compromise, we will compromise, and we will compromise in order to come to a speedy agreement," he said. "But we are not going to be compromised."

In February, the Greek government, elected on a promise to end crippling austerity measures, was asked to come up with a series of economic reforms to obtain a 7.2 billion euro installment of its bailout loans. The country has relied on 240 billion euros in such loans since 2010.

But the country's creditors, which include the International Monetary Fund, have so far found Greece's proposed reforms insufficient.

Investors are wary and the yield — a gauge of investor risk — on Greece's 10-year bonds surged a whole percentage point Thursday to just below 13 percent. The 3-year yield jumped to a staggering 28 percent.

Many in the markets think that without a deal, the Greek government will struggle to make upcoming debt repayments. It must repay almost 1 billion in euros to the IMF next month.

Market jitters were intensified by a report in the Financial Times that the Greek government recently made an "informal approach" to the IMF to have bailout repayments delayed. Greece's finance ministry said Thursday that the report was "totally false."

IMF Managing Director Christine Lagarde rejected the possibility that the IMF would grant Greece a delay. She said no advanced economy had ever made such a request.

Vanoufakis is in Washington, along with Schauble, for the annual spring meetings of the IMF and World Bank.

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Gatopoulos reported from Athens. Associated Press writers Martin Crutsinger in Washington and Pan Pylas in London contributed to this report.