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Friday 8 December 2023 Dublin: 9°C
old money

Greece has been secretly putting together a plan to bring back the drachma

But the government insists it will be able to pay its debts on time.

Updated 15.05

GREEK OFFICIALS HAVE reportedly been drawing up a plan to take over the country’s banks and re-introduce its own currency – although the government insists it will be able to fund its looming debt repayments on time.

The Telegraph quoted “sources close to the ruling Syriza party” as saying the government would sooner default on its International Monetary Fund (IMF) loans than stop running public services and paying pensions.

The next repayment of €458 million is due on Thursday. It has been claimed the country was running out of money and wouldn’t be able to make the date without putting off payments for its own people.

However Greece’s deputy finance minister Dimitris Mardas today told local Skai TV:

We strive to be able to pay our obligations on time. We are ready to pay on 9 April.”

The latest developments come as Prime Minister Alexis Tsipras yesterday announced plans to boost health care in Greece with the hiring of 4,500 specialised medical staff and scrapping the mandatory €5 fee for treatment at public hospitals.

He said austerity measures brought in as part of the country’s bailout had been a “nuclear bomb” at the foundations of Greece’s already-ailing national health service.

The Telegraph said Greece would only be able to pay its next IMF instalment if eurozone lenders agreed to release another chunk of its interim bailout deal.

We are a left-wing government. If we have to choose between a default to the IMF or a default to our own people, it is a no-brainer,” it quoted a senior official as saying.

Greece Bailout AP Photo / Petros Giannakouris Greek Prime Minister Alexis Tsipras AP Photo / Petros Giannakouris / Petros Giannakouris

A banking crisis

The most-radical solution would be to take over the country’s failing banks and then start issuing government guarantees, effectively heralding a return to the drachma.

Greek banks are currently reliant on the European Central Bank for funding after account holders withdrew an estimated €25 billion over fears the country would be booted out of the eurozone.

Any new currency resulting from a so-called “Grexit” was expected to rapidly devalue against the euro because of the country’s weak economy, leaving those with money still in Greece dramatically poorer.

Syriza was elected in January on promises of rolling back austerity conditions linked to its €240 billion in bailout funds.

But since taking government it has softened its stance on many key issues – like reversing spending cuts and tax hikes – after initially refusing to deal at all with the “troika” lenders.

Instead it has come up with a list of proposed reforms to fix the tax system and crack down on corruption which it has predicted would generate up to €6.1 billion extra this year.

- With AP; first published 12.30pm

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