Greece is likely to resort to the ESM

Greece is likely to resort to the ESM


By Spiros Sideris – Athens

The alarm for the Greek economy sounded the Parliamentary Budget Office’s report. Specifically, the report states that despite the slight recovery, which is considered uncertain until the end of the year, if the growth rate does not go up then there is a risk that the unemployment will remain high will have a negative effect on the economy.

“The predictions particularly regarding satisfactory growth rates from 2015 are burdened with great uncertainties. In other words, the momentum of the recovery is still weak despite the containment of recession”, emphasizes the Budget Office.

At the same time it warns of the “red” loans and estimates that the prevailing scenario for the greek economy is a new loan from the European support mechanism, which will be accompanied by a new memorandum. “It should be stressed that even without a memorandum the country will continue to be under supervision – this time from the markets that will replace the troika – assuming that it will appeal to the European Stability Mechanism – (ESM)» the report notes.

According to the Bureau of the Budget, the sources of uncertainty for the Greek economy are:

• The issue of the banks, which despite the recapitalization achieved, it has not been solved, pending a solution to the non-performing loans, which continue to grow and reduce the lending capacity of banks.

• The reform lags can cause a new rise in the country’s lending rates.

• The investments continue to decline.

• The fiscal consolidation is still a road riddled with hurdles.

• The public debt hovers, like the sword of Damocles, over the greek economy making serious domestic and foreign investors cautious.

• There hasn’t been even a minimal consensus between the major political forces. This means that the continuity in key elements of the economic and social policy is not guaranteed.