The Eurozone is on the road to recovery, according to Eurogroup President Jeroen Dijsselbloem.
The Dutch Finance Minister gave an extensive interview with CNBC while attending the International Monetary Fund’s summit in Lima, Peru, in which he claimed the Eurozone is exiting a lengthy crisis.
Dijsselbloem noted that the Eurozone should use its recovery from the crisis as a way to shield itself from future shocks.
“In order to do that we need to extend and complete the banking union and build a capital markets union to diversify the way finance comes through our economies, we need to push through some structural changes to become more competitive,” he explained.
Self-confidence and stability are significant for Eurozone’s well being, the Eurozone President noted while stressing how the case of Greece demonstrates this point.
“I think Greece has very much proven the importance of what political stability is. And I think even for Greece coming out of the elections, Prime minister Tsipras is very much committed to the programme, I think Greece can also return to growth quite quickly,” he said.
The Eurogroup President analyzed the timeline for the recapitalization of the Greek banks, noting the relationship between this financial injection and the reforms Greece must implement.
“The ECB has to go through the banks to see what is needed, in terms of capital needs. The government has to put on the table their plans for pension reform which is one of the key problems, also budgetary terms, is one of the key problems in Greece still. And of course we come to the issue of debt sustainability. And all of those three will come together in October, November, but before the end of the year and if we deal with that then the whole process of bank recapitalisation can take place quite quickly before the end of the year,” he said.
The interview also adressed the issue of debt forgiveness for Greece with Dijsselbloem noting that a hair-cut is probably completely off the table. The Eurozone will instead examine whether Greece “can service its own debt, can carry the debt burden on an annual basis”, according to the Eurogroup President.
On Friday Dijsselbloem had noted that the Eurozone countries had broadly agreed to an annual Greek debt servicing of up to 15% of the country’s GDP.
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