‘Greece must be saved, but not at any price’ – Muscat

Prime Minister Joseph Muscat insists Malta will not accept a debt write-off but is ready to be flexible on its terms • Huawei and Maltese government to sign memorandum of understanding on Monday

Prime Minister Joseph Muscat (Photo by Ray Attard)
Prime Minister Joseph Muscat (Photo by Ray Attard)

Prime Minister Joseph Muscat has today insisted that the Maltese government wants Greece to be saved, warning however, that the decision on Greece’s euro fate should not be safeguarded at all costs.

With Eurozone leaders and finance ministers gearing up for another round of marathon talks aimed at preventing Greece’s default and possible exit from the group, Muscat warned that the debt-ridden country only faces two options.

“There are two scenarios to preventing Greece’s financial collapse: Pull the plug on everything and leave Greece default on its own, or else help Greece recover so that it could start paying the money it owes back.”

“If we were to pull the plug and if Greek banks were to default, its economy will inevitably suffer, and even though Malta will not be exposed to any repercussions, it would become increasingly difficult for Greece to repay its debt,” he said. 

Ruling out a haircut on Malta’s €177 million loan to Greece, Muscat nevertheless explained that Malta was prepared to be flexible on the terms.

“We want our money back, but we are prepared to be flexible on the terms. The money loaned has to be paid back in 2020, but we are ready to discuss other scenarios,” Muscat argued.

On Saturday, six days after more than 60% of Greece rejected the tough austerity measures proposed by the country’s creditors in a historic referendum; Tsipras political gamble appeared to have backfired as his finance minister, Euclid Tsakolotos, acceded to the proposals in order to secure a third bailout. This showed that in reality, the referendum victory was in fact “pyrrhic,” and the situation is now worse, Muscat argued.

The prime minister also explained that all depends on whether European leaders are ready to trust Greece to deliver on a two-year, €12 billion savings programme of radical spending cuts and tax collection measures, in order to receive €74 billion it needs to repay its debts over the next three years.

“The biggest issue is trust, we need to be sure that the Greek government honours its commitments … after all this is the third bailout which it’s requesting, and many commitments had not been implemented as it is,” he said.

Muscat said that the new commitments would introduce taxation on sectors of the economy, which are currently untaxed, and the liberalisation of monopolies and quasi-monopolies.

He said that any new bailout for Greece would not be paid for from national funds, but from the European Stability Mechanism (ESM).

Muscat also announced that on Monday, the government will sign a memorandum of understanding with telecoms giant Huawei, as the telecoms giant prepares to test 5G technology in Malta. Muscat explained that Huawei’s venture in Malta was the first result of the major decisions taken by the government, and that there could be more.

The prime minister also paid tribute to Malta’s much maligned trade envoy Sai Mizzi, saying that the work of the energy minister’s wife was imperative in attracting Huawei to Malta.  Muscat also argued that this investment proved that the criticism leveled at Sai Mizzi was not justified.

Welcoming Standard & Poor’s ‘BBB’ credit rating of Malta, the prime minister explained that the country’s growth prospects remain strong. “The credit rating has reaffirmed Malta’s performance and shows that the country’s economic growth will increase. I am proud by the decisions that this government has taken.”

On the MEPA demerger, the prime minister insisted that the government has an electoral mandate to divide MEPA’s planning arm and environment authority, arguing that this demerger will “strengthen the environment.”

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