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ESM President: Greek Economy Stagnant Again, No Need for Debt Cut

reglingThere will not be a debt haircut for Greece because there is no need for it and the economy is stagnant again, said European Stability Mechanism President Klaus Regling.
In an interview with Austrian newspaper Der Standard, Regling said that the debt repayment maturities in 2018 will be stretched, if necessary, and noted that, “If in 2015 the country had continued with the required reforms, a lot of time and money would have been saved.”
However, the ESM chief left open the possibility to test the sustainability of the Greek debt, but only after the completion of the bailout program in 2018. He speculated that the International Monetary Fund does not pursue a debt haircut but immediate debt relief measures before August 2018.
Regarding the economic crisis and Greece’s ability to recover, Regling said, “Unfortunately it is not so easy. I would say that the Greek economy is still at a standstill. We are at a similar point as we were in 2014, when they recorded growth and unemployment had declined  by 2%. Greece was even able to climb back to the markets. There were clear signs of recovery. And then we had a relapse with the new government in the first half of 2015. With a finance minister who tried to follow a completely different strategy, which has been very costly for Greece. Many reforms fell back, and Greece returned to recession and we got to the third program. Now we are at a standstill again. If in 2015 the country had continued with the reforms we would have saved a lot of time and money.”
On the progress of the third bailout program, Regling commented that, “The program is applied slowly and often with delays. If they continue with the reforms, Greece has many chances to emerge from the crisis. A budget surplus has already been recorded and competitiveness improved due to internal devaluation, i.e. through lowering wages and pensions. Additional reforms are necessary, however, for example in the labor market and privatizations. But it is gratifying that growth and budget fare better than it was estimated. But there is a lot still that needs to improve.”

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