Brussels, 23/05/2013 (Agence Europe) - There are two lessons that Greece can learn from Ireland, says Greek Prime Minister Antonis Samaras: “Ireland shows the way and that there is an end to this road”. “After many reforms implemented by Enda Kenny's government, Ireland shows us the way. We know that they are on the track to recovery and are almost ready to fully return to the international money markets”, he said on Thursday 23 May after a meeting with his Irish counterpart. The Greek government is planning to return to autonomous financing on the money markets, partially at least, next year, explained Greek Finance Minister Yannis Stournaras.
Greece is currently experiencing its sixth year in a row of a shrinking economy. Although 2012 was not particularly good for Greece, it may mark a turning point. The eurozone, like Greece itself, took decisive measures in 2012 to ensure that the country remains in the eurozone.
Eurozone countries put on hold for several months the authorisation of aid while awaiting clear commitments from the Greek government about implementing the terms of the agreement. A new government, under Antonis Samaras, was formed in June 2012 that was able in the space of a few months to convince its partners that it was determined to get the structural adjustment programme back on track. As the European Commission explained in a report published on Friday (see EUROPE 10848), Greece has achieved most of its targets, but could do better in some areas.
“I think it's fair to say that your prime minister (Antonis Samaras) has changed the perception internationally of Greece and has brought a sense of stability and a sense of trust to Greek politics”, said Irish Prime Minister Enda Kenny.
Situation will be clearer next summer. In an interview with Greek newspaper Ekathimerini published on Thursday, the head of the Eurogroup, Jeroen Dijsselbloem, said: “Eurozone countries are prepared to do more if necessary to help Greece, on the condition that the programme is fully implemented. The moment when we are planning to examine if the programme is delivering, both in terms of implementation and economic recovery, is next year, before the summer. There has been no decision on the specifics yet, so I cannot say whether there will be a write off of bilateral debts at this stage”.
As agreed by the eurozone in November 2012, if Athens achieves budget stability by the end of the year, it can expect an easing of its debt burden, most of its bonds now being held by institutional lenders. Greece is planning to focus effort on achieving a primary surplus, a precondition for its debt burden being eased.
Reducing debt is one of the biggest challenges, explained Dijsselbloem, adding that he couldn't say at this stage whether a writing-off of bilateral debt would be possible. In an interview with this newsletter, Greek Finance Minister Yannis Stournaras said that he would be happy with a further reduction in interest rates on the loans already granted (see EUROPE 10847).
It is also too early to talk about the details of direct bailouts of banks by the European stability mechanism, because they are not due to be decided upon until the summer. Stournaras told EUROPE that he felt it would be fair for such bailouts, once they are introduced, to work retroactively. Dijsselbloem said that this was one of the issues the ministers needed to decide on. (EL/transl.fl)