PORTUGAL-PRIME MINISTER Portugal PM says Europe needs common response to 'Grexit'

Record ID: 151710

  • Title: PORTUGAL-PRIME MINISTER Portugal PM says Europe needs common response to 'Grexit'
  • Date: 19th June 2015
  • Summary: LISBON, PORTUGAL (JUNE 19, 2015) (REUTERS) EXTERIOR OF PRIME MINISTER'S PEDRO PASSOS COELHO RESIDENCE PALACETE SAO BENTO PASSOS COELHO WALKING DOWNSTAIRS FOUNTAIN PASSOS COELHO WALKING IN THE GARDEN PASSOS COELHO SEATED DURING INTERVIEW (SOUNDBITE) (Portuguese) PORTUGAL'S PRIME MINISTER, PEDRO PASSOS COELHO, SAYING: "Even with the different levels of the Eurogroup, with qu
  • Embargoed: 4th July 2015 13:00
  • Keywords:
  • Location: Portugal
  • Country: Portugal
  • Topics: General
  • Reuters ID: LVA8QWTCUUG0RC17ASE6EVGEL85S
  • Aspect Ratio: 16:9
  • Story Text: European leaders need to prepare a common response to a possible Greek exit from the euro, though they are better placed to withstand that event than at the height of the debt crisis, Portugal's prime minister said on Friday (June 19).
    Prime Minister Pedro Passos Coelho said the situation in Greece had deteriorated rapidly, with no real change since negotiations with creditors started four months ago under the new left-wing Greek government.
    "If I were in the position of Greece´s Prime Minister, for sure I would be very worried with the situation my country is going through. If after four months, negotiations are lasting more than seven months, they have not reached any agreement to withdraw risk terms. This is the only thing I can say. If I were in his situation I would be extremely worried and I would be interested in reaching a solution. But I don't have all the information from the Greek side," said Passos Coelho.
    Passos Coelho believes European leaders need to prepare a common response to a possible Greek exit from the euro and said the country is in a situation of pre-bankruptcy.
    "There is no doubt that Greece is, in macroeconomics terms, worse. The own government says that they are not in conditions to do the international payments and meet their obligations with the European Central Bank and the International Monetary Fund (IMF). Hence they are in a serious pre-bankruptcy situation," said the prime minister.
    Portugal - the third country to be rescued by its eurozone peers, completing a three-year bailout programme last year - for one was in a much more robust state.
    It had built up a large cash buffer in its public finances through issuance of public debt thanks to low interest rates and the ECB's money printing programme launched this year, Passos Coelho said.
    "We are in much better condition to respond to a risk of that nature. First because we don't have to do international payments so we have a cushion. We won't miss any payment of international responsibility in the debt market. Secondly, my conviction is that the eurozone today has much stronger mechanisms to help all the countries of the eurozone in a situation like this. So I can't say that everything would work in exemplary fashion if such an accident happens because it has never happened before and no one can forecast every circumstance. If a credit event like that happens, I can anticipate that today we (Portugal) have the confidence and security to face that situation," explained the PM.
    States including Portugal and Ireland, which have both completed bailout programmes, were now in a much stronger position, Passos Coelho told Reuters ahead of a summit of European leaders on Monday (June 22) that could decide whether Greece stays in the single currency.
    "What I can say is that the discussion held years ago about the boundaries to defend the countries within the Eurozone, is no longer a discussion that questions the Euro or affects certain countries like Ireland, Portugal, Spain or even Italy. No one is thinking, for sure, that in an adversity situation a political calculation would be done on what countries defend in the event of external accident. I think that the whole Eurozone would respond robustly enough so that debate would have no room as it had years ago," said Passos Coelho.
    Greece is edging closer to defaulting on a 1.6 billion euro repayment it must make to the IMF in less than two weeks unless creditors resume funding that was halted last August. So far, Athens' government has refused to accept creditors' demands for more reforms and budget cuts.
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