Stournaras Says Greece On Way Back

Greek Finance Minister Yiannis Stournaras
Greek Finance Minister Yiannis Stournaras

Defying statistics that show Greece may be years away from an economic recovery, Finance Minister Yiannis Stournaras said he believes a recovery could begin by the end of the year.

Stournaras, a technocrat who was appointed in the middle of 201 by Prime Minister Antonis Samaras to the thankless task of overseeing unpopular austerity measures, told Bloomberg TV that a new influx of aid from international lenders has stopped fears the country would collapse.

“The most important driver is the reduction of the fear that Greece will leave the euro,” Stournaras said. “This is the catalyst. Now most people believe that Greece will stay in the euro so people are bringing back their money from mattresses, from abroad to their bank accounts.”

Greece is in a sixth year of a deep recession with pay cuts, tax hikes and slashed pensions creating a record 26.8 percent unemployment, leaving half of Greeks unable to pay their bills and more than 25 percent defaulting on bank loans and credit cards.

The country’s Gross Domestic Product (GDP) has shrunk by 20 percent since austerity began being imposed nearly three years ago and tax revenues are far off expectations despite big hikes.

Despite all that, Stournaras said the big sacrifices made by Greeks, except for politicians, the rich and tax evaders who have largely escaped paying for political sins, means Greece will survive economically. He agreed with an International Monetary Fund forecast of a return to annual growth of 0.6 percent in 2014 after a contraction of 4.2 percent this year.

Stournaras said there was “ample market evidence that confidence is coming back,” pointing to an increase in bond prices and inflows of deposits to banks. Greek bank deposits increased the most in five years in December.