Finance Minister Filippos Sachinidis warned on Wednesday that should the next government reject the memorandum agreed between Athens and its official creditors, the latter will most certainly stop their funding immediately and Greece will need to make overnight cuts of 4.5 billion euros to cover its internal needs. The outgoing minister added that if the proposals of the Coalition of the Radical Left (SYRIZA), as expressed by party deputy Dimitris Stratoulis on Tuesday, were applied, the budget deficit would soar to 2009 levels -- 24 billion euros. If Stratoulis’s proposals for a return of the money collected in property tax and an end to salary and pension cuts, “then we would have to make further cuts of 24 billion euros, because that is where the proposals of Mr Stratoulis would lead us,” Sachinidis said. Asked whether there was any chance that the memorandum might be renegotiated, Sachinidis said that agreements with the country’s creditors are not set in stone but could be flexible. He added, “We could proceed to changes and amendments to the memorandum.”
But if the memorandum is rejected altogether, then “our institutional creditors will believe they have no obligation to continue funding Greece.” The European Financial Stability Facility (EFSF) gave on Wednesday the green light for the disbursement of the second installment of the new bailout package, amounting to 5.2 billion euros, but Athens will only receive 4.2 billion on Thursday, with the rest to arrive in June, depending on the country’s needs, the EFSF suggested. It remains unknown when and whether the following installment will arrive. The Finance Ministry had said on Tuesday that the public coffers can only cover the state’s expenses until June.
Bank sources expressed major concern regarding political developments and even suggested yesterday that a moderate trend of deposit withdrawal from banks had been observed in the aftermath of the Stratoulis statements, which also included a plan for the use of deposits to kick-start growth in the country. However, Stratoulis made it clear that deposits would be guaranteed up to a certain level. The threshold could be 100,000 euros.