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Tsakalotos: Greece wants clean break from lenders, preparing own post-bailout plan

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Greece expects to make a clean break with official lenders when its international bailout expires in August and has no reason to seek a precautionary credit line, its finance minister has told Reuters.

Instead, Euclid Tsakalotos said in an interview, the country is building up its own protective buffer that, along with unused European bailout funds, will cover Greece "for well over a year", if needed.

In coming months, he said, the country would be preparing its own post-bailout plan with an emphasis on reforms, social policies and growth.

He also said discussions would soon commence with euro zone lenders on debt relief along the lines of a French proposal to link the level of debt restructuring to economic performance.
"We feel we have built credibility over the last three years," Tsakalotos said.

Post-programme surveillance schemes were common to other European member states which sought financial aid, Tsakalotos said. But Greeces own post-bailout plan would be more pro-active.
It would, he said, show lenders and the markets that Greece had ownership over its own programme of future reforms and growth strategies, rather than Brussels.

"We are thinking, by Easter, of preparing our own plan .. to show both the institutions but also the markets that it is our programme, it has ownership... it hasnt been imposed, its not a matter of compromise," he said.
Tsakalotos said that the economy was turning a corner and the country was ready to stand on its own feet soon.

"Weve been outperforming our fiscal targets, the economy is returning," he said. "To those people who think we need something more, like a precautionary credit line or whatever, they are just pushing the key question back and I dont see any reason for that," Tsakalotos said.

The International Monetary Fund has not yet decided if it will participate in Greeces latest bailout programme, having repeatedly voiced concern at the sustainability of the countrys debt pile.
"I think their inclination and their strategy is to get a deal that makes the Greek debt sustainable so they can come on board," he said.

"What we will be going over the next month or so is working out the nitty-gritty of it, the mechanism, how it will kick in, when it will kick in," Tsakalotos said adding that a kind of subcommittee of the Euro working group would handle this.

Details on the cash buffer, the growth mechanism along with the implementation of the measures agreed in June would give investors clarity over Greeces trajectory, he said.

Greece returned to bond markets in July after three years of market isolation. Another issue would follow "soon", he said.

"The only outstanding issue is the composition of that buffer, how much will come from Greeces own funds, and how much will come from the ESM and Im looking forward to that debate."

TOXIC LOANS

Greek banks are saddled with about 100 billion euros in bad loans (NPLs), after a seven-year depression that cut economic output by a quarter and pushed more than a fifth of the population into unemployment.

The results of stress tests on the banks by euro zone supervisors are expected in May.
"We shall see what the results of the stress tests are," said Tsakalotos. "I think that a lot of people would want to give banks a chance to see all these bits of the puzzle that we put in to work through, and to address the NPL problem."

"The good thing is that its going to have the same criteria across the European banking system, its not like its picking Greece as an exceptional case."

He pondered at a question on the governments achievements. It was, he said, a mixed picture but the foundations for a sustainable economic recovery had been laid.

"There are the pillars there, and it will be up to our government and if we are elected again, to see whether we can build on that," he said, referring to elections in 2019.

"... The difference between a happy ending and a sad ending is where you cut the film, yes? We are still on the film."

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