Stathakis: Investors anticipate Greece will follow Portugal’s example in restoring market financing

Investors anticipate Greece will be able to fully restore its financing through the international markets, in the way Portugal did after it exited its bailout program, Energy Minister George Stathakis told the Athens-Macedonian News Agency (ANA) in an interview published on Sunday.

The minister argued that a “clean” exit from the adjustment program, that is, without a precautionary credit line, is feasible and predicted that if the unemployment rate continues to fall at this rate, it will reach 15 percent by the next elections in September 2019.

ANA: The government insists on a “clean” exit from the bailout program in August, but the European Central Bank, the Bank of Greece and the Commission leave open the possibility for a precautionary credit line. Do you believe that a “clean” exit is possible despite all this?

Stathakis: The common goal of the Greek government and the institutions you are mentioning is to fully restore the Greek economy’s funding from the international markets with the completion of the current program in August 2018. So far we have been moving smoothly towards this goal. The government is already borrowing with low interest rates (1.65 pct) through treasury bills, has carried out its first exploratory bond auctions and in the coming years will continue with even more “ambitious” moves.

Most importantly, however, investors seem to be assuming the restoration of the country’s financing by buying Greek bonds on the secondary market. Already the borrowing cost has fallen to 4 pct, compared with 5.4 pct at the beginning of December, 6 pct six months ago and 7.3 pct 12 months ago. I would like to remind you that in September 2013, nine months before exiting its own program in June 2014, Portugal’s borrowing cost for its 10-year bond was more than 7 pct. It seems, therefore, that investors anticipate that we will have a path similar to that of Portugal.

ANA: It seems that growth in 2017 will be significantly lower than expected by the government and international organizations. Where is this due? And do you think that the equally ambitious goal of 2018 will be achieved?

Stathakis: Although we still do not have the data for the whole of 2017, there seems to be a small shortfall from the initial estimates – something that was reflected in the 2018 budget. In previous years there have been many such deviations. The failure to achieve targets was a key feature of the implementation of the memoranda in 2010-15.

Unlike the previous governments, we have remarkably outperformed fiscal targets, and I believe we will soon have similar performance in terms of growth. GDP data support the recovery scenario. In the summer, GDP was 0.3 pct higher than in the spring. The most important thing is that it was the third consecutive quarter of growth, something that had not happened since the end of 2006. At constant prices, the GDP generated in the previous four quarters was the highest in the last four years. […]

Finally, there is a steady decline in unemployment, which in in September 2013 was close to 28 pct, at the end of 2014 it was 26 pct, and in September it dropped to 20.5 pct – the lowest level since October 2011. It has therefore fallen by almost 5.5 percentage points since we took over, with half the improvement occurring in the last 12 months. Continuing at this rate until the elections in September 2019, the unemployment rate will return to 15 pct –the level at the end of 2010, when the memorandum era began.