Mitsotakis Says Greece Back, Lower Interest Rates Key

Greek Administrative Reform Minister Kyriakos Mitsotakis, the man in charge of firing thousands of public workers in an austerity drive, said the big spending cuts and tax hikes are paying off with a looming recovery that will be buoyed by falling interest rates as the country plans a market return. Mitsotakis, without emphasizing the effects on workers, pensioners and the poor, said Greece has regained “lost credibility” with lenders, even after stiffing private investors two years ago with 74 percent losses in a frantic big to write down its staggering debt, which is still at 311.5 billion euros, about $430 billion. He also didn’t point out that Greece now will seek to do the same to its international lenders, the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) in a restructuring or debt relief that will leave it up to taxpayers in the other 17 Eurozone countries to pick up the bill for decades of wild overspending by alternating administrations of New Democracy Conservatives and PASOK Socialists. He spoke to the Associated Press as a further drop in borrowing rates buoyed the government ahead of an expected bond issue that could come as early as this week. “Significant progress has been made over the past couple of years on the fiscal consolidation front,” Mitsotakis said, noting that the country had posted a “remarkable primary surplus” — the budget excluding interest payments on outstanding debt. “This has allowed us to re-establish lost credibility and place us in a position where we should be able within the foreseeable future to tap international capital markets,” he said. As he spoke however, public and private sector unions were setting off on a 24-hour April 9 general strike against austerity measures even though hundreds of demonstrations since Greece in 2010 first sought bailouts have failed to sway the government from the unrelenting path of austerity. Mitsotakis said the dissatisfaction is “only natural” and added that: “We never promised miracles and we never said the situation is going to dramatically improve from one moment to the next.” “Having said that, if you just compare Greece today to where it was two years ago when the whole topic of discussion was not Greece’s remarkable comeback but whether Greece would be able to stay within the Eurozone, I think that the progress has been overall quite remarkable.” But despite the improved figures, Greece is still suffering from what Mitsotakis called “the legacy of an unprecedented fiscal contraction.” The country’s economy has shrunk by about a quarter over the past four years, and unemployment hovers at 28 percent. The government saw its borrowing costs in a short-term auction fall sharply April 8 — a further sign that investor confidence is growing. The sale raised 1.3 billion euros ($1.8 billion) in a sale of six-month treasury bills at 3.01 percent, compared to 3.6 percent in March. Now the government is planning a longer-term bond issuance, three-to-five years, with a test of about 2 billion euros ($2.75 billion) perhaps imminently as Prime Minister Antonis Samaras, the New Democracy leader, hopes to pick up support ahead of critical May elections for the European Parliament and Greek municipalities. No date has been set, and government officials refused to comment on reports that the bond issue could take place this week, with Deputy Finance Minister Christos Staikouras saying only that Greece was on “a return trajectory” to global markets. Greece is surviving on two rescue packages of 240 billion euros ($330.7 billion) from the Troika and most of it will run out this year, leaving the government to hope investors won’t be scared off by the remaining prospects of debt sustainability. Greece sold its last long-term bond in early April 2010, a month before the bailout deal, when it paid 5.9 percent for a 7-year issue. Ten-year borrowing costs are now at the lowest since early 2010.