Greece can achieve a primary budget surplus this year and growth next year if it sticks to economic reforms, but a return to bond markets will be challenging, European Central Bank Executive Board member Joerg Asmussen told yesterday’s To Vima newspaper.
Asmussen was in Athens last week to meet senior government officials and take stock of the economy. His visit was overshadowed by speculation of a new bailout for Greece after comments by German Minister of Finance Wolfgang Schaueble.
“Having a low, but positive rate of growth next year is achievable, but there must be persistence with reforms,” Asmussen told the paper in an interview.
“I understand the difficult political situation and the small parliamentary majority, but what has been achieved with such political pain up to now must not be demolished. What’s the credible alternative solution?” he was quoted as saying.
Mired in its sixth straight year of recession, Greece has already been bailed out twice since 2010 with 240 billion euros (US$321.14 billion) of loans coordinated by the ECB, EU and IMF.
Athens faces a funding gap of about 11 billion euros in 2014-2015 after its current bailout program ends in the first half of next year and its eurozone partners have pledged additional support until it can tap markets again.
“It is true that the debt level will rise in the next years and a full access to markets will be a challenge,” Asmussen said.
However, he said speculation of a third rescue package was premature.
“Repeated talk of a debt reduction, a haircut, does not help. It distracts the attention of all stakeholders from what needs to be done under the current adjustment program. We must make this program work,” he told the paper.
He said the part of the bailout that dealt with the recapitalization of Greece’s top four banks was a success, helping to restore financial stability, with funds left over at the bank bailout fund as a cushion for any future needs.
Asmussen told the paper complacency and reform fatigue were the biggest risk to an improving European economy.
“The biggest risk to the positive trend I see shaping up is not doing enough, believing that markets are calm or that we are in safe waters,” he said.