Middle-east Arab News Opinion | Asharq Al-awsat

Greece turns to growth, elections after debt deal | ASHARQ AL-AWSAT English Archive 2005 -2017
Select Page

ATHENS, (Reuters) – After the success of a debt cut plan which paves the way for a 130-billion euro ($170.55 billion) international bailout, attention in Athens is shifting to politics and on how to kick-start debt-laden Greece’s stricken economy, officials said on Saturday.

Greece averted the immediate threat of an uncontrolled default on Thursday when it successfully concluded a bond swap deal under which private sector creditors agreed to accept deep cuts in the value of their holdings.

The deal, which cuts about 105 billion euros of the country’s privately-held debt, more than half of the total, was offering Greece a second chance to slowly regain investors’ and markets’ trust, its central banker George Provopoulos said.

“This is a new opportunity… to gradually restore confidence in the economy’s prospects,” he was quoted as saying in financial newspaper Imerisia.

European Central Bank policymaker Ewald Nowotny shared the cautious optimism. “A clear success has been achieved here,” Nowotny said in an interview aired by Austrian radio, adding he saw no need at the moment for any talk about a further bailout.


Once the debt swap is completed on April 12, when a smaller tranche of bonds worth at least 20 billion euros will be exchanged, Greece can go ahead with new elections, an official said.

“I imagine it (the elections) will be somewhere then,” government spokesman Pantelis Kapsis told Skai television when asked if the polls would take place on April 29 or on one of the following Sundays.

Formed in November, Greece’s coalition government under technocrat Prime Minister Lucas Papademos had a narrow mandate to complete bailout and debt cut talks and then hold elections as soon as possible.

But austerity measures associated with the policies have plunged the Greek economy into its longest and deepest slump since World War Two.

Gross domestic product shrank by a record 7 percent in 2011, data showed on Friday. Investment slumped by 21 percent after a 15 percent slide in 2010.

Greece hopes to get 1 billion euros in financing from the European Investment Bank (EIB) this year as a stimulus to encourage investment, a senior official said on Saturday.

Greece and the European Commission are pushing the EIB, the European Union’s long-term investment arm, to disburse the funds, said Gikas Hardouvelis, top economic adviser to Papademos.

“The faster we do it, the better. The economy is sinking and everyone is too scared (to invest),” Hardouvelis told Mega television.

But the EIB was still worried about getting too exposed to Greece and a solution to overcome its reluctance might be to disburse the funds using local banks as intermediaries, he said.

As a way to help boost Greek growth, the European Union has already increased its share of financing in certain EU co-financed projects and said it would help Greece cut red tape to make more efficient use of EU funds earmarked for it.

Greece is entitled to a total 20 billion euros in so-called EU structural funds for the period 2007-2013. It has only used 8 billion euros so far, EU Commission President Jose Manuel Barroso said on February 29.