Dombrovskis allays fears over Greek payments

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Valdis Dombrovskis, European Vice-President and Commissioner for Social Dialogue and the Euro arrived in Washington Thursday for the Spring Meetings of the World Bank Group and the International Monetary Fund (IMF) as doubts are being raised over Greece's political will and ability to pay back its loans to the international financing bodies.

Ahead of his scheduled speech to the Atlantic Council and participation in the G7 meeting of finance ministers and bank presidents, the former prime minister of Latvia gave an interview to Bloomberg business news channel’s Tom Keene.

“We know that there has been lots of rhetoric on the Greek side during those negotiations,” the European Commission Vice President said in an interview in Washington on Thursday. “What really matters is what progress we’re making now in negotiations.” He cited technical aspects and “how seriously the Greeks are engaging with preparing the list of structural reforms which needs to be implemented.”

Responding to questions about Greece’s potential for a spectacular default that could see the state lose its EU membership or at least leave the currency union, Dombrovskis maintained a cautious optimism about continued European growth.

“We see that Europe is gradually recovering,” he said. “We recently updated upwards our growth forecasts for both the EU and EU area. Also next month we’ll update our forecast and it will sooner again be upwards rather than downwards.”

But the Commissar for Social Dialogue and the Euro admitted that external factors like low oil prices and the weak euro were helping keep prospects brighter for the European economic model.

“But it’s also important to understand that those currency developments and ECB quantitative easing can only buy time for EU member states to deal with the structural problems in the economy,” he warned. “So that’s why there’s so much focus in the EU on structural reforms to strengthen the competitiveness of the economy.”

As for the latest critical stage of EU negotiations with Greece over its economic challenges, Dombrovskis insisted “it’s premature to draw any conclusions yet,” as “there is still some time” for technical negotiations to continue, though “it’s no secret that they are quite complicated.”

In conclusion he added that “it’s important that all sides including Greece are actually engaging seriously in those negotiations, providing a credible set of reforms to actually deal with Greece’s economic challenges and ensure financial stability in Greece.”

Dombrovskis also obliged the financial news source with an update on the relationship between the Baltic states and Russia, which he termed “of course complicated” and causing “quite a few worries about security in the region.” However he stated that “Europe is working closely with NATO allies to boost security in the region, as you know.”

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