Greek economy hitting targets ahead of troika inspection

Greek economy hitting targets ahead of troika inspection


By Lefteris Yallouros – Athens

Greece’s Finance ministry announced it is well within targets in its attempt to close 2014 with a primary surplus, having posted a surplus of EUR 707 million in the first five months of the year (from a primary deficit of EUR 970 million in the same period 2013).

The news shows the government has applied economic policy with considerable success as the primary surplus achieved so far is four times the budget target.

Tax revenues were also up (+0,9% compared to the target), amounting to EUR 16.060 billion.

Communicating positive results in the attempt to put the economy on the track to growth is important to the Greek government ahead of impending talks with Eurozone counterparts on debt relief. The country also hopes to avoid having to take another rescue loan from its troika of lenders in order to plug possible fiscal gaps in 2015 and 2016.

Having returned to markets earlier this year, Greece could issue a small-sized, medium-term bond in the coming weeks, according a finance ministry official who spoke to Reuters earlier this week. However, as Standard & Poor’s (S&P) pointed out Wednesday, “it would be premature to judge Greece on accessing the market”.

“What’s much more important is how the debt profile of the Greek government improves by the very significant lengthening of maturities of the official loans” S&P head of sovereign ratings for Europe, Middle East and Africa, Moritz Kraemer says.

This is precisely why the Greek government is keen to show troika inspectors arriving in Athens July 8th that reforms are proceeding steadily and the economy is well on track to return to growth. Convincing Eurozone allies that reforms have not run out of steam Athens believes is key towards being granted much-needed debt relief.

Nonetheless, if accessing bond markets normally again is a long-term sign of stability, the government need not look much further than the country’s four largest banks which have all returned to capital markets with equity and bond issues as international investors warm to the country’s economic recovery prospects.

National Bank of Greece deputy CEO Petros Christodoulou revealed Tuesday that the bank may issue more debt soon after April’s EUR 750 million five-year bond issue at a lower interest rate than the Greek sovereign.