The Greek government is enlisting U.S. investment bank Lazard Ltd. to advise on its $270 billion debt burden ahead of negotiations with international lenders. The move comes as tensions are building in Europe over Greece’s ability to pay off its four-year bailout plan obligations, the Financial Times reported Saturday.
In a statement, newly elected Greek Prime Minister Alexis Tsipras said he was confident “we will soon manage to reach a mutually beneficial agreement, both for Greece and for Europe as a whole.”
Tsipras’ far-left Syriza party rose to victory last weekend after exploiting a widespread anti-austerity sentiment in Greece, sparking fears among European leaders of a Greek default. In the days since the elections, leaders have alarmed creditors and investors by pledging to freeze privatization initiatives, rehire government workers and roll back existing austerity measures. Euclid Tsakalotos, a spokesperson for the Greek government, reportedly said it is « unrealistic » to expect Greece to repay its debt in full.
Greece’s hiring of Lazard indicates the Tspiras administration is preparing for harsh talks with the « troika, » the group overseeing the Greek bailout plan and comprised of the International Monetary Fund, European Central Bank and European Commission, the Times noted. The trio imposed strict austerity measures as a precondition of the financial rescue plan in the wake of the 2008 financial crisis, but many Greeks oppose the measures as the country grapples with severe unemployment and sputtering economic growth.
« No one side is seeking conflict, and it has never been our intention to act unilaterally on Greek debt, » the prime minister said. He added bringing Lazard on board « in no way entails that we will not fulfill our loan obligations to the ECB or the IMF. » Lazard advised Greece on its original bailout in 2012.
German Chancellor Angela Merkel expressed impatience with Greece. On Saturday, she ruled out the possibility of debt forgiveness for the new Greek government, and she insisted the debt-stricken country should abide by the original bailout agreement. Merkel said she did « not envisage fresh debt cancellation » for Greece, she told the Hamburger Abendblatt newspaper.
Greece still has a debt of about $335 billion, or 175 percent of its gross domestic product, even after private creditors slashed billions from the country’s debt in a 2012 renegotiation.