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Greek finance minister: No more austerity, it's dangerous

Reported by Julia Chatterley, Written by Ansuya Harjani
Thursday, 14 Nov 2013 | 10:00 PM ET
Greek finance minister: 'Cannot take more austerity'
Thursday, 14 Nov 2013 | 9:10 PM ET
In an interview with CNBC's Julia Chatterley, Greek finance minister Yannis Stournaras rejected calls for any further fiscal tightening.

Greece will not yield to pressure to impose further austerity measures, said Finance Minister Yannis Stournaras, responding to the Eurogroup's call for the indebted country to step up reform efforts in order to secure its next tranche of aid.

"No austerity measures are needed. They are dangerous; we should let the automatic stabilizers work. We are willing to take structural measures with a fiscal impact, but not austerity measures," Stournaras told CNBC late Thursday.

"Greece has achieved tremendous progress up to now, people have made huge sacrifices, so we have to be very careful now what kind of measures we implement to close the fiscal gap, if any," he added.

Eurogroup president Jeroen Dijsselbloem on Thursday said Greece must urgently meet key commitments it has made to its international creditors in order to unlock a one-billion-euro ($1.3 billion) loan installment, which is needed to meet its funding needs next year.

(Read more: Troika set to get tough over Greece budget shortfall)

Greece's international lenders, known as the "troika", estimate that the country faces a 2 billion euro shortfall in achieving its primary budget surplus target of 1.5 percent of gross domestic product (GDP) next year. However, the government believes it could fall short by just 500 million euros.

Louisa Gouliamaki | AFP | Getty Images

Addressing the difference in projections for the fiscal gap, Stournaras said, "As an academic, this is not a precise exercise, so we are negotiating."

"We have a draft budget with targets. What we're trying to do is take the necessary structural measures to make these targets viable and credible," he said. "Yesterday we gave troika measures in the order of 0.7 percent of GDP, we think they are enough to close any fiscal gap, and make our budget credible."

No threat to stability of government

Discussing the stability of the Greek government – which survived a no-confidence vote this week – Stournaras said there is "absolutely no risk" for the ruling coalition.

"We have covered 80 percent of the necessary fiscal adjustment. So the 20 percent that is remaining is very timely for the government to be threatened. We are clever people, now that we're close to the end, we will not destroy what we have achieved so far," he said.

(Read more: Greece's tourism sector to boost economy)

The finance minister said his message to international investors would be that the economy is in a position where there is only upside.

"What I can say now is that we have eliminated the causes of the crisis," he said. "The recession is much milder than we thought. For the first time in many years we are going to have a primary [budget] surplus, nobody expected it last year, not even me."

(Read more: Paulson leads charge into Greek banks)

—By CNBC's Ansuya Harjani; Follow her on Twitter: @Ansuya_H