BERLIN - Swedish Finance Minister Anders Borg wants Greece to follow the example of Baltic countries like Estonia, where budget cuts equated to 15 percent of gross domestic product, he told German newspaper Die Welt. "Only after Greece achieves a very substantial surplus can we start to talk about a re-profiling or similar relief," Borg said in comments to be published on Saturday, insisting that the Greeks "swallow the medicine we prescribed" for them.
Unlike its neighbour Finland, Sweden is a European Union member state that has opted not to give up its own currency, and -- in that sense at least -- the manufacturing and export-strong country may have less of a vested interest in the euro's future than Germany would. On Wednesday, Estonian Prime Minister Andrus Ansip told Reuters Insider Television that Greece should copy the fiscal austerity measures of Latvia, an IMF aid recipient.
Under current plans, Greece plans to reduce its budget deficit from 15.4 percent of gross domestic product in 2009 to 2.6 percent in 2014, along the way selling some EUR 50 billion worth of assets by then. Borg demanded the Greeks immediately commence with reforms to their social security system. "It simply can't be that Greeks continue to retire at such an early age. They must stay longer in the labour market, work and naturally pay taxes," he said. "Greece will need five, six, maybe even seven years to regain its fiscal credibility," the Swedish finance minister added, implying it could take much longer before Athens could resume issuing government bonds in capital markets.
Borg also pushed for Greece to create an independent institution charged with running the privatisation plan, similar to the Treuhand that Germany created to sell East German state assets. "It looks for the moment as if Greece owns assets of EUR 300 billion. No one can sell such a tremendous amount in a short time -- that's why you need to have an institution that can implement that over the long term," Borg said, adding it could take five to 10 years to complete the privatisation.
Reporting by Christiaan Hetzner, additional reporting by David Mardiste in Tallinn