DW: Greek PM Alexis Tsipras: Athens in no danger of Grexiting
Greek Prime Minister Tsipras has said his country is no longer in danger of Grexiting – leaving the EU – and is seeing an inward investment boom. He said he is hopeful after nine years of recession, but questions remain.
Greek Prime Minister Alexis Tsipras reiterated positive comments made in August that the Greek economy was now on course to grow in 2017 and 2018 and that Athens would exit its current bailout program in 2018.
This would allow Greece to move out of a cycle of needing international bailouts to repay interest on international loans, which in turn dampen domestic growth, he said.
The bailout, worth €86 billion ($103 billion), expires next August, a year before Tsipras’ term ends.
“The country, after eight whole years, will have exited bailouts and suffocating supervision. That’s our aim,” Tsipras said in his annual policy speech in the northern city of Thessaloniki. “We are determined to do everything we can.”
He referred to a French businessman who had accompanied French President Emmanuel Macron on a visit to Greece last week, who told him that “Grexit had become Grinvestment.”
The Greek economy nearly collapsed in 2010 under a debt mountain and had to be bailed out by its eurozone partners three times to prevent it from bringing down the single currency.
Athens’ third rescue program – financially supported by EU states, but not initially by international financial institutions such as the International Monetary Fund (IMF) – runs to August 2018.
Tsipras needs to regain full access to international bond marketsand leave such institutional help behind. In July, Greece went back to bond markets after a 3-year gap, issuing 5-year debt at an average yield of 4.66 percent.
The still nominally leftist Tsipras, who rose to power after the de facto collapse of the Greek economy in 2011, has moved from a critical position in relation to domestic business to one in which he argued the only way Greece can exit its financial crisis is by creating an investment-friendly environment.
Tsipras, for example, met with the board of the Hellenic Bank Association and agreed in late August that the government should proceed with the necessary reforms for the economy to achieve sustainable growth.
Growing, but still no debt relief
After months of discussion, the EU and IMF agreed in June to release more rescue funds to Athens, bringing the total from its third bailout to €40.2 billion.
The IMF has said it will only contribute to the program if EU creditors take further steps to lighten Greece’s debt load, which has yet to happen after objections from Germany.
Greece must go ahead with its reforms-for-aid program and become more competitive, German Finance Minister
Wolfgang Schäuble said earlier in the summer.
He added that debt relief for Athens was “currently” not on the agenda. Starting a discussion about debt relief would send the wrong signal to Athens at a time when the economy was doing better and recovering, Schäuble told the daily Mannheimer Morgen.
Chancellor Angela Merkel and Schäuble do not want to discuss any details of debt relief for Greece before federal elections on September 24.
Economy on the up
Economic recovery is gradually emerging in Greece, with the country’s statistic agency showing the country’s GDP up 0.8 percent in the first half of 2017, with the country’s economy growing faster than that of the UK.
Greece had endured numerous quarters of negative growth and was in four technical recessions in nine years.
Increases in consumption and exports were the key drivers for the continuing expansion of the country’s economy in 2017, the statistics agency said.
The latest Purchasing Managers’ Index (PMI) published by Markit also showed significant improvement in the Greek manufacturing sector in August, at its highest level for nine years, while purchasing activity also climbed to its highest level since 2009.
“In 2016, direct foreign investments were the highest in the last 10 years and in 2017 further improvement is expected,” Tsipras said.
“The heightened interest for investments in Greece is not something that happened by chance,” Tsipras said, recalling recent visits by Macron and Russian leader Vladimir Putin.
Ratings up, unemployment down
Credit rating agency Fitch upgraded Greece’s debt by one notch in August, a month after Athens returned to credit markets with a bond issue for the first time in three years.
Fitch boosted Greece’s debt rating to B- from CCC, with a positive outlook, which indicates the possibility of further upgrades.
Two years after Tsipras’s leftist government nearly crashed Greece out of the euro, and eight years after the country plunged into economic crisis, employment numbers are finally improving.
Tsipras added his administration has created around 500,000 jobs since taking over in 2015 – “a record for the last 16 years” – and expects the economy to grow by nearly 2.0 percent this year.
But he conceded that signs of economic growth had not been felt so far by the majority of Greeks.
A major possible threat to GDP figures over the second half of the year is the next program review that is being carried out by Greece’s lenders, with direct talks resuming this month.
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