Ditching Euro Not Answer for Greece: Minister
Staff Writer, CNBC.com
As Greece's leaders tried to finalize the details of its new coalition government, Pavlos Yeroulanos, Minister of Culture and Tourism in the current regime, told CNBC that leaving the single currency would not solve its problems and ruled out a referendum on Greece's membership of the euro zone in the near future.
A return to the drachma, Greece's currency before it entered the European Union, has been mooted as a way for the heavily indebted country to kick-start its sluggish economic growth.
Yeroulanos said: "Depreciating the currency doesn't last forever."
He also criticized as "irresponsible" recent statements from "eurocrats and politicians" about the state of the country and its future in the euro. While he did not name any politicians in particular, recent comments from Prime Minister of Luxembourg Jean-Claude Juncker that other euro zone leaders are "not saying Greece has to stay a member at all costs" increased speculation that the country would return to the drachma.
His colleagues in Prime Minister George Papandreou's Panhellenic Socialist Movement (Pasok) party arelocked in negotiations with opposition New Democracy over forming a new government, without Papandreou at the head.
Papandreou's final downfall came last week, when he called for a referendum on the latest Greek bailout package, which would involve European Central Bank officials taking a greater role in running Greece's finances.
"We need to make sure that, however we come out of this, democracy comes out stronger," said Yeroulanos. "I don't think that we would have a referendum right now."
He added: "Greece has had a long and strong relationship with the EU and the Greek people know that they have benefited from it."
Markets remain skeptical about Greece's ability to reform systemic problems, such as tax evasion and sluggish economic growth.
"Will any of this make Greece run more efficiently? The answer is no," Neil Dwane, Chief Investment Officer, RCM, told CNBC Monday.
"Greece is not a developed nation," Ken Fisher, CEO, Fisher Investments and author of "Markets Never Forget" told CNBC Monday. "It's Mexico without the good bits."