“Putting Greece’s debt on a sustainable path is critical to Greece’s long-term economic health and I encourage all parties to be flexible to successfully conclude this fall's negotiations” Lew said. US Treasury Secretary stressed that achieving debt sustainability and stability were key to ensuring Greece’s economy returns to long-term growth. “Having long-term clarity is important” Lew said.
On primary surpluses which are required of Greece, he said “the issue of the targets must be solved between Greece and its partners”. He stressed, however, the importance of a realistic plan and targets that can be met. In an environment with high debt and surpluses, it is difficult to achieve debt sustainability, Lew noted, adding that debt restructuring is the “key”.
“At the end of the course, Greece should be able to repay its debt and achieve growth rates” he stated.
Mr. Lew praised the government for the implementation of reforms (which he described important as Greece needed to build from the beginning the foundations for a strong country), the progress achieved and the signs that the economy is exiting recession and is heading towards growth. He also referred to Greece's important geostrategic position.
In a recent interview in the Financial Times, Secretary Lew claimed that that the turmoil in neighboring Turkey strengthens Greece’s case for debt relief. “I would hope [the recent regional upheaval] would change the climate in which discussions of debt relief happen, just because it’s the right thing to do on its own, and at a time when Greece is in a position [of] geopolitical significance that’s a good time to reinforce their fiscal future” Lew told the FT.
The visit to Athens on Thursday by US Treasury Secretary Jack Lew is being viewed by the Greek government as an opportunity to highlight the significance of the country’s geostrategic position in its talks with creditors but also to reclaim an important role in the region.
Lew also noted that Greece’s role as a transit point for refugees heading towards Europe from Syria, Iraq and other strife-torn countries had led to a renewed focus on the country’s geopolitical significance.
Speaking in Athens after talks with Greek Finance Minister Euclid Tsakalotos, Lew said further progress on reforms is important so European creditors could begin discussions with the International Monetary Fund on “the timing and details of debt relief”. “You have to fix the foundation to have a strong Greece” Lew argued and called on the Greek government to become more proactive in implementing reforms.
Citing U.S. President Barack Obama, Secretary Lew noted that the Greek economic program was not an end in itself and that its goal was to bring about economic growth and prosperity for the Greek people, sources quoted by Kathimerini said, adding that the United States intents to take a leading role on the issue before the Obama administration has ended.
Greece has been dependent on bailout loans from other Eurozone countries and the IMF since 2010. To qualify for the funds, successive governments have had to implement painful austerity measures and reforms, including in the sectors of labor, pension and social security, as well as introducing successive tax hikes and launching privatization efforts. The reforms have come at a high cost, with Greece’s economy contracting by a quarter of GDP and causing the highest unemployment rate of the European Union.
After his official visit to Athens, Treasury Secretary will head to China for a meeting of G-20 finance ministers and central bank governors.