Brussels, 17/05/2013 (Agence Europe) - On Friday17 May, a European source said that Greece may well be able to make a partial return to the money markets in 2014.
Athens would, however, have to wait longer before being able to make a full return: “Partial return to the market - things don't look that negative, things continue to improve, maybe already next year something could be done.” The source said that ten-year borrowing rates have fallen sharply since March 2013 and now stand at under 10%.
The European source says that he did not share the assessment of the Bruegel think tank that the Greek programme was a failure. “We all agree that there have been significant problems in the Greek adjustment, but also huge achievements (fiscal, labour market, etc). It is not black and white,” commented the source.
On Friday, the Commission published a report on the Greek government's implementation of the second adjustment programme. Overall, Greece is continuing to come up with positive outcomes and remains on track.
Reform of the public sector is also on track and Greece is improving the business environment for businesses.
The Commission's report says that privatisation is taking too long to implement. The above source said the privatisation targets had not been altered, but he was concerned that there might be delays. Unemployment remains too high.
In an interview with EUROPE, Greek finance minister Yannis Stournaras said that he expected unemployment to begin to fall in 2014 (see EUROPE 10847).
In terms of the budget, Athens has overshot all the targets thus far, although some measures were not implemented, like the gradual reductions in retirement pensions, for technical reasons. The Commission is expecting a primary balance to be achieved in 2013. Stournaras told EUROPE that Greece would be intensifying its efforts to achieve a positive primary surplus this year. In its report, the Commission forecasts a primary surplus of 1.5% in 2014.
“We discussed what measures have to be taken in order to be sure Greece stays on track,” says the source, adding that reform of the tax system would help. He said the report indicated that the budget prospects beyond 2014 were uncertain and would depend “on the strength of recovery and improvement in taxpayer capability to service their tax obligations.” At present, the forecast shortfall in meeting the targets is 1.7% in 2015 and 2.1% in 2016.
On sustainability of the public debt, prospects are little changed on the previous report (in December 2012). Greek debt is expected to start to fall in 2014 and return to below 120% of GDP by 2021. (EL/transl.fl)