Former Greek Prime Minister George Papandreou predicted that Greece will stay in the eurozone and that the austerity measures required by the nation’s bailouts might be eased.
“We can have some modifications to the program,” Papandreou said in an interview with Bloomberg Television to be aired late on Monday. “Whether we can stretch out the fiscal adjustment for another year or so will take a little bit of pain out.”
Papandreou, 59, said some of the claims being made by Greek politicians about reneging on the budget-cutting accords should be taken with “a grain of salt,” and they are creating unrealistic expectations for overhauling the agreements. Papandreou said he hopes whoever wins the elections “acts responsibly,” and he didn’t predict the outcome.
Greece has “a few weeks” before its government runs out of money so this is “a make-or-break period,” Papandreou said. A Greek exit from the euro would result in hyperinflation and bank runs as well as lower growth and wages, he said.
Spain is poised to become the fourth country in the 17 nation euro-area to require emergency assistance as the currency bloc’s finance chiefs plan weekend talks on a potential aid request to shore up the nation’s lenders.
“We have to find a way to recapitalize the Spanish banks,” Papandreou said. Politicians must make “decisions in time to calm the market,” and “can’t be behind the curve this time.”
Papandreou, whose father founded his Socialist Pasok Party in 1974, stepped down as prime minister in November and helped put together a new government to bridge differences with European Union leaders and officials after his proposal of a referendum on the terms of Greece’s second European bailout roiled markets.
“I did all that I could do,” Papandreou said, adding the “personal costs” were “worth it” to serve his country. “Now it’s up to the next government to take this package and run with it.”