Greece Sees End of Recession in 2014

Greek EconomySix years into a deep recession and with the economy still shrinking, and 3 1/2 years after $325 billion in international bailouts, Greece should – maybe – begin to see growth again in 2014, Deputy Finance Minister Christos Staikouras said just before presenting the budget to Parliament.

That came, however, as envoys from the country’s international lenders left Athens without reaching a deal on long-delayed reforms necessary to release a pending one billion euros ($1.37 billion) installment that now could be put off for months.

The budget also is incomplete as officials of the Troika of the European Union-International Monetary Fund-European  Central Bank (EU-IMF-ECB) say there is a hole of up to 2.9 billion euros that must be filled but the government insists it’s only about 500 billion euros and can be taken care of with structural reforms and going after tax cheats instead of imposing more austerity measures.

Staikouras said that the 2014 budget projects economic growth of 0.6 percent next year. He spoke as he presented the budget, submitted to Parliament moments earlier by Finance Minister Yannis Stournaras. Staikouras said the economy is expected to contract by 4 percent this year, slightly less than the originally expected 4.5 percent.

He said the conditions are being created for Greece to return to the international bond markets next year. It has been priced out of them by high interest rates since 2010, and relies on international rescue loans.

A previous government in 2011 also hit private investors and Diaspora bond holders with 74 percent losses, destroying the Cypriot banking system and forcing that country to go hat-in-hand to the Troika for a 10 billion euros ($13.7 billion) rescue package as well.