PARIS (Reuters) - Greece is turning to the OECD group of industrialized nations to help reform its economy, but Prime Minister Alexis Tsipras says his country will still have to restructure its debt to overcome its woes.
Greece signed an agreement with the Organisation for Economic Co-operation and Development on Thursday aimed at helping Athens carry out a series of reforms. Such reforms are necessary to help persuade its EU partners to renegotiate its 240 billion-euro ($254 billion) bailout package.
International creditors have halted the disbursement of further funds to Greece pending a review of the new government’s reform agenda. Economists have warned that without a cash injection, the country could go bust in the coming weeks.
Tsipras said that while his country could meet its financial obligations, its debt structure could not be maintained in the long term.
“We can no longer pretend that the country’s public debt is viable and serviceable, when it stands at around 178 percent (of output),” said Tsipras, whose Syriza party was elected to office in January on an anti-austerity program. “It is absolutely vital for Greece to have its public debt restructured,” he said after talks at the OECD headquarters.
EU partners have made clear that a debt write-down, or so- called haircut, was out of the question. But they have indicated that stretching out the maturities on its debt and possibly granting some sort of moratorium on payments due was possible.
However, they have said that such concessions can only be considered once they have agreed on a revised set of austerity measures and economic reforms for Greece.
Under the terms of Greece’s deal with the OECD, the multinational body will provide know-how regarding the design and implementation of government reforms.
“Over the last four years another organization, the IMF, came to our country and imposed a policy of fiscal discipline, harsh austerity, which resulted in us losing 25 percent of our GDP,” Tsipras said.
“Now, I believe the time has come for another international organization, the OECD, to come and for us to cooperate so that in the next four years we recover lost ground.”
Tsipras is due to meet European Commission President Jean-Claude Juncker on Friday in Brussels. The meeting comes against a backdrop of growing tensions between Athens and Berlin, which is clearly frustrated by the slow progress in the bailout talks.
OECD Secretary General Angel Gurria said his organization would do what it could to help Athens. “You can count on the OECD,” he said at a joint event with the Greek leader.
“The real key to success, as proven by many member countries, lies in the magic of implementation, implementation, implementation.”
The OECD think tank is not part of the EU/IMF/ECB troika that has saved Greece from bankruptcy, but which is widely hated in Greece for imposing fierce budget rigor.
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Reporting by Ingrid Melander in Paris and Renee Maltezou, Karolina Tagaris and Costas Pitas in Athens; Writing by Crispian Balmer; Editing by Larry King