Tuesday

29th Nov 2022

Athens denies referendum on euro membership

  • The government flatly denies a euro referendum is under consideration (Photo: Images_of_Money)

Greece has denied reports out of Athens on Tuesday that the country’s prime minister is planning a referendum on euro membership.

Greek government spokesman Ilias Mosialos said in a statement that Prime Minister George Papandreou is "not considering holding a referendum on whether his nation should exit the euro common currency," denying a report in the Kathimerini newspaper.

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"There are no thoughts whatsoever on this," he said. "It's a no-go area for us. We are members of the euro and this is not going to be put to a referendum."

The European Commission for its part refused to comment on the idea.

According to a Greek government source, the news is the result of confusion with a referendum on structural adjustment that was announced at the beginning of the summer.

"A plebiscite was announced in June on reforms of the state. This is not something new and it is not on this particular issue," said the source. "That is categorically excluded."

The bill on the plebiscite was presented to parliament on Monday.

Also on Tuesday, Fitch, the credit ratings agency, said that Greece will likely default on its debts but will not leave the eurozone.

Separately, finance minister Evangelos Venizelos is set to reconvene talks via conference call this evening with senior troika officials. A conference call on Monday night ended inconclusively.

Greek officials for their part say that they expect a solution to be reached this evening.

"They are going to agree to a rough plan. They are now touching up the details," said one contact.

While the full scale of the number of public sector redundancies has been between 20,000 and 100,000 posts, the source put the expected figure now at around 50,000, "but over a horizon of three years rather than immediately."

An EU official meanwhile said that the two sides are not negotiating. Instead, the troika heads of mission are assessing whether Greece is ready to meet the targets imposed by international lenders.

"Reaching a deal is not the point. A resumption of the troika mission will take place when enough elements are there for them to do it," said the official. "It's not a matter of negotiations, but assessment whether they are meeting the targets."

The Brussels source appeared more pessimistic on whether a breakthrough was achievable Tuesday night, saying that an agreement was not necessarily required ahead of a semi-annual meeting of the International Monetary Fund and senior global finance officials in Washington this weekend.

In the US capital, EU economy commissioner Olli Rehn is to meet with his US counterpart, Timothy Geithner, as well as US Federal Reserve chief Ben Bernanke, and the head of the IMF, Christine Lagarde.

According to EU officials, Rehn is on the phone with Geithner "all the time."

In its latest World Outlook Report released on Tuesday, the IMF cut its global growth forecast and warned of "severe" fall-out if the eurozone crisis was not solved soon.

The world economy will grow just four percent this year and in 2012, the international lender said, down from June predictions of 4.3 percent for this year and 4.5 for 2012.

"There is a wide perception that policymakers are one step behind markets," IMF chief economist Olivier Blanchard said upon release of the report.

"Europe must get its act together," he said.

Greece in limbo after EU conference call

While negotiations between the Greek government and international lenders remain inconclusive, a report out of Athens suggests that the prime minister is looking to hold a referendum on staying in the euro.

Austerity cuts not to blame for Greek drug shortage, EU says

The European Commission has said its austerity measures are not to blame for a decision by pharmaceutical giant Roche to halt delivery of cancer drugs to Greek public hospitals. The company warned Italy, Portugal and Spain might be next.

EU task force for Greece ‘here to help, not control’

The head of an EU task force for Greece said on Thursday that the aim of the newly established body is to support the country as it attempts to slash its public debts. The team arrived in Athens as fresh figures put unemployment in the country at a record 16.3 percent, with 32.9 percent of young people out of work.

Merkel, Sarkozy: ‘Future of Greece is in euro’

German Chancellor Angela Merkel and French President Nicolas Sarkozy attempted to calm market anxiety over a possible Greek default on Wednesday evening, affirming their commitment to Greek membership of the euro.

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European Central Bank president Christine Lagarde said more rate hikes will come, but also admitted a recession will not lower inflation — leaving some economist question the logic of the policy.

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