After years of tough austerity measures, Greece yesterday emerged from its third and last bailout, although officials warned that the country still has a “long way to go.”
The EU, the European Central Bank and the IMF loaned debt-wracked Greece a total of 289 billion euros (US$330 billion at the current exchange rate) over three successive programs in 2010, 2012 and 2015.
The economic reforms that the creditors demanded in return brought the country to its knees, with a quarter of its GDP evaporating over eight years and unemployment soaring to more than 27 percent.
Photo: AFP
However, Greece has now returned to growth, its once vast public deficit has been turned into a solid budget surplus and the jobless rate has fallen below 20 percent, officials said.
“For the first time since early 2010, Greece can stand on its own feet. This was possible thanks to the extraordinary effort of the Greek people, the good cooperation with the current Greek government and the support of European partners through loans and debt relief,” European Stability Mechanism board chairman Mario Centeno said in a statement.
“It took much longer than expected but I believe we are there,” Centeno added.
However, Greek households continue to feel the effects of unpopular and stinging austerity.
“The reality on the ground remains difficult. The time for austerity is over, but the end of the program is not the end of the road for reform,” European Commissioner for Economic and Financial Affairs Pierre Moscovici said over the weekend.
Moscovici’s opinion is shared by Central Bank of Greece Governor Yannis Stournaras.
“Greece still has a long way to go,” Stournaras said in an interview with the Kathimerini newspaper on Sunday.
If Greece backtracks “on what we have agreed, now or in the future, the markets will abandon us and we will not be able to refinance maturing loans on sustainable-debt terms,” Stournaras said.
He also expressed concern that “if there is strong international turbulence, either in neighboring Italy or Turkey or in the global economy, we will face difficulties in tapping markets.”
The Greek government estimates that its financing needs are now covered until the end of 2022, opening up room for it to plan its return to the capital markets.
Greek Prime Minister Alexis Tsipras, who is to hail the end of the bailouts with a televised address today, in June after the agreement by the eurozone ministers to put an end to the rescue program said that Greece could start focusing on a “social state.”
“Now we have the opportunity to proceed with targeted reliefs, to proceed with tax reduction in 2019 and to support the social state and welfare,” he said.
The country might have achieved budget surpluses — excluding debt repayments — of about 4 percent in 2016 and last year, but its hands remain tied on social welfare spending.
Greece has already legislated for new reforms for next year and 2020, and is to remain under supervision for several years.
The improving economic indicators are not yet translating into tangible improvements in Greeks’ day-to-day lives.
“The bailout is over, but the shackles and the asphyxiation are still on,” the opposition-friendly To Vima newspaper wrote on Sunday.
Athens University of Economics and Business economics professor Nikos Vettas said that he believes it is “imperative” to generate “very strong growth” over the coming years.
Otherwise, “households that are in a very weak position due to 10 years of cumulative recession will continue to suffer,” Vettas said.
However, Greece has gained some credibility among the international community.
“The commitments assumed by Greece for the future are clear. I have no doubt that they will be respected,” French Minister of the Economy and Finance Bruno Le Maire told To Vima on Sunday, adding that the country’s bailout exit is a “great success.”
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