Greek Leader vows to undo austerity moves

Greece unveiled plans Sunday to undo several austerity measures that were a condition of its international bailout, ranging from tax cuts to increasing the minimum wage, putting the country firmly on a collision course with its European partners.

In a speech to lawmakers, according to Wall Street Journal, Prime Minister Alexis Tsipras reiterated that Greece would seek a bridge loan from its international creditors until June, refusing to accept an extension of its current bailout, as demanded by European partners.

“We know very well that talks won΄t be easy and that we are facing an uphill path but we believe in our abilities,” he said, presenting his newly-elected government΄s policy statement to lawmakers.

“The more our partners want austerity, the more the problem with the debt will get worse,” he said.

Among the changes announced by Mr. Tsipras are raising the taxable income threshold; gradually increasing the minimum wage, starting next year; and dropping a recently introduced property tax. He also promised the retirement age wouldn΄t be changed.

These changes are aimed at providing the country with a growth push, he added, after the economy contracted by about a quarter in the last five years and unemployment shot up to more than 25%.

It is not clear, however, where the savings will come from in order to pay for these changes, given that Mr. Tsipras promises that the country will avoid creating fresh budget deficits.

Greece΄s current EUR240 billion (roughly $272 billion) rescue runs out at the end of the month, and the government has warned it could run out of money in weeks unless it can gain access to additional funds.

The Greek government also has said that it wants to change the terms of its funding agreement, which require the new leftist government to adhere to austerity measures agreed to by its predecessors.

But Greece΄s partners in the European Union–led by Germany–have insisted that promises made by the previous Greek government have to be kept if Athens wants to receive further assistance.

Eurozone officials have asked Greece to come up with a specific funding plan by Wednesday, when finance ministers, meeting in Brussels, will try to move closer to a deal on the paralyzed bailout program. A day later, Mr. Tsipras will sit down for his first talks with German Chancellor Angela Merkel at a European summit in Brussels.

Last week, Mr. Tsipras, along with Greek Finance Minister Yannis Varoufakis, toured several European cities, including London, Berlin, Rome, Paris, Brussels and Frankfurt, in a bid to build support for his government΄s plans.

The dispute between Athens and its European partners, together with the freezing of the long-delayed payout of a slice of Greece΄s existing rescue funding–has raised questions over how much longer the country will be able to pay its bills. Diminishing tax revenues in the run-up to January elections have pushed Greece΄s finances to a precarious point, according to government officials.

The country΄s growing cash crunch prompted Standard & Poor΄s Ratings Services on Friday to cut Greece΄s sovereign credit rating one notch further into junk territory.

If the Greek government runs out of cash, the country would be forced to default on its debts and reintroduce its own currency, thus abandoning the euro. Most of the aid that Europe and the International Monetary Fund have pumped into the country would be lost.

Despite the risks to the country΄s future, Mr. Tsipras has the backing of most Greeks. A survey conducted on behalf of privately owned television station Skai by the University of Macedonia showed Saturday that seven in 10 Greeks agree with the country΄s standoff with international creditors. At the same time, however, nervous depositors have pulled EUR8 billion to EUR10 billion from the country΄s banks in January alone, government officials say.

The banking system΄s woes were exacerbated last week by the European Central Bank΄s decision to no longer accept Greek government bonds as collateral from banks seeking funds.

Mr. Tsipras” speech marks the start of a three-day debate on the government΄s policy statements, which winds up Tuesday evening with a confidence vote. The two-party coalition government–which includes junior coalition partner right wing Independent Greeks–is expected to pass the confidence vote.