Greece will leave bailout scheme in 2014: PM

December 31, 2013 - 10:05:21 am

A man reads the necessary documents for turning in his car licence plates in a tax office in central Athens yesterday. Greeks turned in their car licence plates in order to avoid high road taxes the coming year.

ATHENS: Greece will exit its bailout programme next year without needing a third aid package, the country’s prime minister announced yesterday as he insisted that citizens could look to 2014 with confidence.

Antonis Samaras told long-suffering Greeks that the end of the country’s financial assistance plan was in sight, after almost four years of painful austerity, and that the new year would bring the prospect of normality.

“In 2014 we will make the big step to exit the loan agreement,” Samaras said in a nationally televised address. “In 2014, Greece will venture out to the markets again [and] start becoming a normal country,” he added. “In the new year, Greek debt will be officially declared viable, meaning there will be no need for new loans and new bailout agreements.”

Ireland left its own bailout programme earlier this month, but a Greek exit would be a major milestone in the financial crisis that began to grip the eurozone in the spring of 2010. Greece has already received two aid packages, with around €130bn (£109bn) wiped off its debt pile in 2012.

Greece is expected to finally leave recession in 2014, and investor confidence in the country has grown through the last year. The yield, or interest rate, on its 10-year bonds has fallen to around 8 percent — compared with 30 percent at the peak of the crisis — as traders regained faith that the debt would be repaid. Greek government bonds were one of the best-performing assets in 2013, returning 47 percent.

Analysts, though, are sceptical that Greece will not need further aid next year. It has still not reached agreement with its international lenders over the size of its fiscal shortfall in next year’s budget — with troika officials pushing Athens to make further painful cutbacks.

Samaras was elected eighteen months ago, and much of his time in office has been dominated by public anger created by the unpopular austerity measures demanded in return for the country’s loans. Political instability has been a constant threat, with his majority now whittled down to 153 of the 300 seats in parliament.

Record unemployment and pay cuts has pushed prices down across the country, and this punishing ‘internal devaluation’ may continue in next year.

“In Greece, marked deflation has been evident since March and is likely to continue for some time to come,” predicted Howard Archer of IHS Global Insight.

Samaras was speaking just two days before Greece assumes the rotating presidency of the EU. There has been concern that Athens’ six-month stint could be overshadowed by further bailout negotiations.

Zsolt Darvas, an economist and senior fellow at the Bruegel Institute in Brussels, has predicted that the Greek presidency could be a rough ride:

“It will be very difficult for Greece due to its (internal) problems, its public administration inefficiency and the time pressure imposed by the European Parliament elections,” Darvas said.

The Guardian

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