Brussels, 07/04/2014 (Agence Europe) - The Greek authorities do not seem to be alone in their belief that the country, which has been in receipt of financial aid since 2010, will not need a third bailout.
In Athens last week for a meeting of the Eurogroup, the director general of the European stability mechanism (ESM), Klaus Regling, and the German finance minister, Wolfgang Schaüble, stressed the green shoots of economic recovery in the country. Regling went as far as to comment that new loans from the eurozone might not be needed (see EUROPE 11051).
In an interview with To Vima, Regling pointed out the context in which he stated last summer that Greece may require a third bailout. Back then, he said, that was the most likely scenario, and all his comment was intended to do was to signal that support from the eurozone's bailout fund would be available if required. In the summer of 2013, the Greek authorities were adamant that further aid must not come with strings attached, something the eurozone refused to promise.
More recently, the Greek government has signalled a desire to not request new aid and it is planning to issue three- and five-year sovereign bonds in the first quarter. Greek media say the bonds will either be issued ahead of an official visit by the German chancellor, Angela Merkel, on Friday 11 April, or the following week.
Regling and Schäuble say that it is too soon to decide on the future of the current programme. The German finance minister stressed the positive news for the Greek economy, which has returned to growth after six years of recession, and the fact the country's public finances are in better shape. In an interview with Kathimerini, he said that whatever happens, Greece can rely on Europe to keep its promises. In February 2012, the eurozone promised to support Greece for as long as it takes, as long as it sticks to its commitments. The minister said he had concerns about new reforms, but the terms of any new programme would be much less strict.
Regling said it was a good idea for Greece to test out the markets, noting that the yield on Greek ten-year bonds on the secondary market was currently just under 6%, compared with two years ago, when they were 80% or so higher. He added, however, that 6% was still expensive and every bond with such a high interest level adds to the debt burden.
On the question of reducing the debt burden, which the Eurogroup will be discussing after the summer break, Schäuble said that the writedown for private investors in 2012 had been a one-off. Regling said that the EFSF interest rates (the ESM's predecessor) had already been reduced as far as was possible and that with the deferment of interest rate payments for ten years, Greece would have minimum debt-servicing costs for the next decade, which was good news for foreign investors. Regling said that some beneficiary countries had room for manoeuvre for reducing interest rates a little on their bilateral loans to Greece. (EL)