Greek govt fully committed to bailout despite dwindling support: Econ Minister

Greece's economy minister is confident that the country's leftist government is making progress on its bailout program and following the right policies, despite opinion polls signaling a decline in public support for the governing Syriza party.

Greek Economy Minister Giorgos Stathakis told CNBC that the government was focusing on the correct mix of fiscal policies, including higher taxes -- particularly on the wealthy -- and an easing of cuts in the public sector, amid continued pressure to fulfil the terms of its third bailout program.


Greek people stage a protest against the government's austerity policy at the Sintagma square in Athens, Greece on May 22, 2016.
Ayhan Mehmet | Anadolu Agency | Getty Images
Greek people stage a protest against the government's austerity policy at the Sintagma square in Athens, Greece on May 22, 2016.

"(Last year) we had a feeling, and I think we were right, that no further cuts were possible in the public sector - wages and salaries were slashed by 40 percent in the last three or four years and public expenditure in education and health had reached a very marginal level, so we made a choice that no further cuts were there," he said in an interview on Wednesday.

The government had decided that its fiscal targets would be obtained by having a "more gradual adjustment of the fiscal targets and raising taxation where it has less effect – which means on the most wealthy parts of our society," he added.

Greece reluctantly signed up to a third bailout worth 86 billion euros ($96 billion) last summer after coming dangerously close to bankruptcy and an exit from the euro zone. The move was controversial, however, given that the majority of Greeks voted against more austerity measures.

As part of the bailout, Greece is required to pass a series of far-reaching reforms, including privatizing public assets, overhauling the tax system and implementing unpopular pension and labor market reforms.

While it is in the process of reforming its economy in line with the demands of its international creditors, the country has been criticized for making slow progress in achieving a series of bailout "milestones."

However, Stathakis said the government was committed to implementing its bailout program in full.

"The government may be criticized for the mix of policies and a whole range of issues but…it is committed to the implementation of the bailout agreement, that it obtains its targets particularly on the fiscal (level) and that it's a government that is committed to things that have been agreed," he said.

In the meantime, the popularity of the governing Syriza party has also fallen amid straitened times for Greek citizens. Over the last week, two Greek polls – the first conducted for Eleftheros Typos newspaper and the second for Real News – have shown that the opposition New Democracy party is more popular than Syriza and that Prime Minister Alexis Tsipras' popularity has declined.

Stathakis insisted that opinion polls sent a mixed signal, however, and that "one strong message" was that the government "continued to have widespread support."

"This indicates that there is a perception that the government should be allowed to complete its four year period (in power) and develop its policies one by one," he said, although he conceded that it was "understandable" that there was dissatisfaction that progress was being made "under very strict conditions."

"The government is committed to going on to implementing its policies and to complete the four-year period which is the mandate of the electorate in the last election," he stressed.

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