Greek PM Tsipras pushes on with radical change, markets tumble

Greek PM Tsipras pushes on with radical change, markets tumble
Greek Prime Minister Alexis Tsipras

ATHENS - Prime Minister Alexis Tsipras promised "radical" change on Wednesday as his new government swiftly moved to roll back key parts of Greece's international bailout, prompting a third day of losses on financial markets.

A swift series of announcements signalled the newly installed government would not back down from its anti-austerity pledges, setting it on course for a clash with European partners, led by Germany, which has said it will not renegotiate the aid package needed to help Greece pay its debts.

Even before the first meeting of the new cabinet, ministers had hit the airwaves to reassure voters they would honour campaign pledges to roll back the tough economic policies imposed under Greece's 240-billion-euro bailout programme.

The planned sale of a 30 per cent stake in Public Power Corporation of Greece (PPC), the country's biggest utility, was halted while ministers pledged to raise pensions for those on low incomes and reinstate some fired public sector workers.

"We are coming in to radically change the way that policies and administration are conducted in this country," Tsipras told ministers at their first cabinet meeting.

Financial markets have looked on nervously, with Greek 10-year bond yields up 50 basis points at 10.30 per cent, the main Athens stock index .ATG down 4 per cent and bank stocks down 12.6 per cent to extend losses into a third day.

Saying that the mood towards Greece was changing since his leftwing party's sweeping election victory on Sunday, Tsipras said he would avoid antagonism with European Union and International Monetary Fund creditors.

"Our priority is also a new negotiation with our partners, seeking to reach a fair, viable and mutually beneficial solution so that the country exits the vicious circle of excessive debt and recession," he said.

ASSET SALES HALTED

He said the government would pursue balanced budgets but would not seek to build up "unrealistic surpluses" to service Greece's massive public debt of more than 175 per cent of gross domestic product. He added that he expected a "productive" meeting on Friday with Jeroen Dijsselbloem, head of the euro zone finance ministers' group.

Priorities would be helping the weakest sections of society, with policies to attack endemic clientelism and corruption in the economy, reduce waste and cut Greece's record unemployment.

After announcing a halt to the privatisation of the port of Piraeus on Tuesday, for which China's Cosco Group and four other suitors had been shortlisted, the government said it would block the sale of a stake in the Public Power Corporation of Greece.

PPC, which is 51 per cent owned by the state, controls almost all of Greece's retail electricity market and accounts for about two thirds of the nation's power utility. Shares in the utility were down nearly 13 per cent, while shares in Piraeus Port (OLPr.AT: Quote, Profile, Research) were down nearly 8 per cent.

"We will halt immediately any privatisation of PPC," Energy Minister Panagiotis Lafazanis told Greek television a few hours before officially taking over his portfolio.

"There will be a new PPC which will help considerably the restoration of the country's productive activities," he said.

The previous government of former Prime Minister Antonis Samaras had passed legislation last year to spinoff part of PPC to liberalise the energy market as part of a privatisation plan agreed under the EU/IMF bailout.

In a sign of the potential sensitivity of the move to cancel the privatisations, Tsipras met China's ambassador to Athens, Zou Xiaoli on Tuesday to stress the importance of good relations with Beijing.

As well as announcing a halt to selling state assets, ministers have promised to reinstate laid-off public sector workers whose dismissal was ruled unconstitutional and restore cuts to pensions.

"What we have said during the election campaign will be our guide, starting with measures that do not have large spending impact," Deputy Social Security Minister Dimitris Stratoulis told Antenna TV.

More about

Alexis Tsipras
Purchase this article for republication.

BRANDINSIDER

SPONSORED

Most Read

Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.