Referendum result will influence aid to Greece - Muscat

The result of Sunday’s historic referendum will affect what kind of aid Greece will be given and at what price, Prime Minister Joseph Muscat said this morning.

After years of economic turmoil and months of negotiations between the embattled Greek government and Eurozone leaders, Sunday will be a watershed moment for the debt-ridden country as its 9.9 million voters will go to the polls to decide on whether to accept the latest austerity measures in exchange for a rescue package to avoid default and a banking collapse.

Speaking in a telephone interview on One Radio, Muscat – who had previously dismissed Greece’s decision to hold a referendum as “irresponsible” – underlined that it was inconceivable for Greece to meet its financial demands without implementing any austerity measures. Acknowledging that the brunt of the measures would be borne by the most vulnerable, the prime minister also recognised that the Greeks' precarious financial situation is due to the “irresponsibility of their leaders.”

Muscat also noted that Greece had no money left, and that consequently, on Tuesday it became the first developed economy to default on a debt to the International Monetary Fund. Greece’s inability to repay its €1.6 billion payment resulted in a week of unending drama culminated by the closing of banks and the rationing of cash.  

“In truth the question being asked to the Greeks actually refers to an offer that is no longer there … The reality is that next week the Eurozone leaders will meet to discuss the way forward for Greece.”

“Just as Greece is within its democratic rights to hold a referendum, the Eurozone leaders also have a choice to decide whether Greece should continue to be helped to remain in the Eurozone, and at what price. The result today will influence the help given to Greece and the EU’s attitude towards Greece,” he said.

The prime minister also explained that Greece’s decision to hold a referendum – which was announced after days of high-level talks in Brussels – severely diminished the Eurozone’s trust in the Greek government.

Muscat also reiterated that Maltese banks would not suffer any consequences if the Greece were to collapse. “What is important for Malta is that its banks are not exposed to the Greek banks or institutions.”

The Labour leader also added that whereas Greece and other governments were carrying out social cuts, Malta’s economic growth allowed it to carry out new reforms and to increase pensions.