Greece will be able to start issuing bonds and borrowing from the markets soon, possibly by next year, European Stability Mechanism Managing Director Klaus Regling said in an interview with the Slovakia’s “Hospodárske noviny” newspaper published on Friday.
According to Regling, economists currently questioning the sustainability of Greece’s debt “have not really looked at the facts” and the very low debt repayments required of Greece under the arrangement with its creditors. He said he was confident that the country should have no problem, provided it continued to implement reforms. “At the moment, there really is no burden. And there won’t be one for a long time, because our loans to Greece already have an average maturity of around 30 years,” he said.
Sticking with the reforms was paramount, he warned, in order for the country to get back on its feet, but ruled a fourth programme will not be needed if Greece implements adjustment policies.
“This third package was agreed about a year ago in a volume up to 86 billion euros and from today’s perspective, not all of that will be needed. It runs until the middle of 2018 and if Greece implements all the reforms that are part of this programme, by mid-2018 Greece can again stand on its own feet and will be able to have market access and refinance itself. So I am quite confident this is sufficient,” he said.
He says that the need for two programs arose because implementation capacity had been weaker than in other countries, leading to delays. He also suggested that attempts by Prime Minister Alexis Tsipras and his government to reverse some policies and reforms in the first half of 2015 had sent the country back into recession. “That has been now corrected and since August of last year, cooperation is again good and Greece is making progress,” he added.
“I remember that at the end of 2014, as we were coming to the end of the second programme, there was a discussion about a possible third programme, but the amounts that people were talking about – if at all a programme was needed – was 10, maybe 20 billion euros. In the end we needed €86 billion. That shows how big the problem became after policies went in the wrong direction for six months,” Regling pointed out.
“In the second quarter of 2016, there was small positive growth again. So I think now Greece is getting back to where it was in 2014,” he added.
(Source: ANA-MPA)
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