Greece will exit its bailout program this year without needing a third aid package, Greek Prime Minister Antonis Samaras announced on Monday, saying that citizens could look to the new year with confidence.
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 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. In the new year, Greek debt will be officially declared viable, meaning there will be no need for new loans and new bailout agreements,” he added.
Ireland left its bailout program 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 and had about 130 billion euros (U$179 billion) wiped off its debt pile in 2012.
Greece is expected to leave recession this year and investor confidence in the country has grown throughout the past year.
The yield, or interest rate, on its 10-year bonds has fallen to about 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 last year, returning 47 percent.
Still, analysts are skeptical that Greece will not need further aid this year. It has still not reached agreement with its international lenders over the size of its fiscal shortfall in this year’s budget, with officials from the country’s troika of international creditors — the EU, the European Central Bank and the IMF — pushing Athens to make further painful cutbacks.
Samaras was elected 18 months ago and much of his time in office has been dominated by the public anger created by the unpopular austerity measures demanded in return for the country’s loans.
Political instability has been a constant threat, with the Greek leader’s majority now down to 153 of the 300 seats in parliament.
Record unemployment and pay cuts have pushed prices down across the country and this punishing “internal devaluation” may continue into next year.
“In Greece, marked deflation has been evident since March and is likely to continue for some time to come,” Howard Archer of IHS Global Insight forecast.