Greece on target to return to markets, creditors say

Greece on target to return to markets, creditors say
Queues at Greek banks during crisis

Greece is on target to tap bond markets for money again by the end of this year and exit its bailout programme next summer, representatives from the country's European creditors said.

Officials from the European Commission, European Central Bank and a eurozone rescue fund said recent austerity measures that included further cuts to pensions and economic reforms will further solidify Greece's public finances over the years ahead.

"Greece is entering the final year of the programme with a real opportunity to regain market access and actually end the programme on schedule in August next year," Declan Costello, the EU Commission's Greek mission chief, said at a conference at a luxury seaside resort near Athens.

Greece was first bailed out back in 2010 when it was effectively locked out of bond markets because investors were asking for sky-high interest rates in return for money.

Without the money, Greece would have gone bankrupt and most likely have had to ditch the euro currency.

Now those so-called yields are tumbling, a real sign that investors think lending to Greece is a viable option.

Once Greece is able to borrow money in the bond markets to fund its debt repayments, it will not need any more bailout cash from its creditors.

The more benign bond market backdrop has come in the wake of the recently passed austerity measures and an agreement with creditors to restart loan instalments to Athens, which means Greece has the money it needs to meet its debt obligations this year.

In a note of caution, Nicola Giammarioli, Greece mission chief for the eurozone's rescue fund, the European Stability Mechanism, said legislation was not enough - now the Greek government had to implement them.

"We are half-way," she said.

"We have a good framework for (non-performing loan, or NPL) management.

"Now it's time for NPLs to be reduced.

"Greece has created an independent tax authority. Now it's time to collect taxes...

"A privatisation and asset fund has been set up. Now it's time to privatise and generate value."

The return to market will be a key moment for Greece, which has relied on bailout money for the past seven years.

In return, successive governments have had to enact big spending cuts and tax rises, a combination that contributed to a deep recession and a surge in poverty and unemployment.

As the creditors' representatives met at the seaside town of Lagonissi, 40 kilometres south of the capital, Athenians struggled with a garbage strike that has left mountains of trash on the city's streets.

Collections have stopped for nearly two weeks after municipal workers demanded an end to short-term labour contracts, challenging a hiring freeze imposed under bailout rules.

The strikers met with Greek Prime Minister Alexis Tsipras on Tuesday, rejecting a compromise proposed by his government, and are planning a protest rally in central Athens on Thursday.

AP

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