The recession that has gripped Greece during the last six years is set to end in 2014, says Greek Prime Minister Antonis Samaras, who announced today at the Thessaloniki trade fair that his country is currently an “island of stability” in an unstable region.
The Thessaloniki trade fair has been the venue of several protests against the government’s severe austerity measures. Protesters say they will be out on Sunday again in sympathy with civil servants who face redundancy.
Since 2008, the Greek economy has contracted by 23%.
The European Union and the International Monetary Fund (IMF) have bailed Greece out to the tune of €240 bn ($316 bn) so far.
The bailouts were handed to Greece on condition that the government raised taxes, imposed dramatic cuts, and reformed pensions and the labor market.
Greece will need another €11bn ($14.5bn)
Experts believe Greece will need a further bailout this fall. The theme is being avoided in Germany until its general elections are over. According to the Guardian newspaper, Greece faces a funding gap of up to €11bn ($14.5 bn) in second half of 2014.
According to calculations made within the European Union and the IMF, the Greek economy is expected to shrink by 4.2% in 2013, compared to 6.4% in 2012. Mr Samaras believes the shrinkage will be less than 4.2% this year.
Had Greece not had to pay out to service its loans, the country would have achieved a budget surplus in fiscal 2013, Samaras said.
Greece has done its part, Samaras added, now the lenders need to do their part by easing up on the debt burden.
The positive tone of Samaras’ speech is not shared by the average man/woman in the street, according to the BBC.
European Central Bank rules out participating in any Greek debt relief
Mario Draghi, president of the European Central Bank (ECB) says the ECB has ruled out bailing out Greece with any money.
Draghi told reporters in Frankfurt on Thursday after a meeting with the heads of the Eurozone finance ministers “It is pretty clear that we cannot do monetary financing”.
When asked whether the ECB might participate in any Greek debt relief, Draghi said “No”.
The current chair of the eurogroup of finance ministers, Dutch finance minister Jeroen Dijsselbloem, said regarding another bailout for Greece:
“(It is) realistic to assume that additional support will be needed. As far as the potential need for a third program for Greece is concerned, it’s clear that despite recent progress, Greece’s troubles will not have been completely resolved by 2014.”
When the current bailout ends in 2014, Greece is not likely to be able to return to borrowing from the financial markets, Dijsselbloem added.