Ind’p Parliament Budget Office: Market exit does not mean end to creditors’ supervision

2 February 2018
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The last report by Parliament’s independent Budget Office, under outgoing head Panayiotis Liargovas, again expresses heightened concerns and caution over looming economic developments in the still bailout-dependent country, warning that “a market exit does not mean an end to (creditors’) supervision, nor an end to austerity.”

The quarterly reports by the Budget Office have been a distinct “thorn in the side” of the embattled leftist-rightist coalition government for some time now. The Tsipras government’s leitmotif over recent period is that a permanent end to the punishing bailout eras coincides with the conclusion of the current memorandum program in August 2018, and that a “clean exit” to the markets afterwards will mark a return to normalcy for the Greek economy.

The fourth quarter report for 2017, issued on Thursday, also stresses that “Greece, even if everything goes well, will still be subject to standing fiscal governance restrictions in effect for all EU member-states, and especially (members in) the Eurozone.” The Parliament Office report also reminds that reinforced supervision of Eurozone member-states who have borrowed from the ESM is expected to continue.

“To the degree with which economic policy is characterized by consistency in relation to (meeting) goals (such as fiscal stability), the markets will reward the country with an upgrade of its credit rating and lower lending interest rates. If, however, the markets ascertain that governments are not characterized by consistency in the exercise of economic policy … whereby risking fiscal stability, then the markets will be punitive, hiking interest rates and making the prospective access to loan capital difficult or unfeasible.”

The thinly veiled displeasure on the part of the Tsipras government for the quarterly Parliament Budget Office reports issued under Liargovas’ tenure is judged as a decisive factor in a decision by Parliament President Nikos Voutsis, who is elected with ruling SYRIZA party, not to renew the former’s tenure last November.

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