Informal working meeting on migration and asylum issues
Date: 24/06/2018 . Location: Belgium,Brussels – EC/Berlaymont. © European Union , 2018 Photo: Etienne Ansotte
It was yesterday when the Prime Minister Alexis Tsipras stated from the Greek island of Ithaca that the austerity measures are over cheering for the Greek bailout programme exit.
Mario Centeno, the chairman of the ESM’s board of governors, had said last Monday that Greece is once more a nation which doesn’t need any additional rescue programme thanks to the effort carried out by the Greek government and people. Sharing the same views, Pierre Moscovici mentioned that the Greek economy has recovered concluding a three year European Stability Mechanism (ESM) stability support programme.
However, the International Monetary Fund (IMF) reports that Greece still faces many challenges which include its economic growth and staggering debt.
Background
The Greek government has been under surveillance and financial assistance since 2010. In the last 8 years, Greece is provided with 288,7 billion euros in loans from its EU partners and IMF. The last financial aid was requested by the ESM in July 2015. After three long years, the Eurogroup confirmed that all perquisites of the fourth and final review of the programme have concluded giving the green light for Greece’s exit from the financial aid package.
End of third bailout programme
During ESM’s support, Greece received 61,9 billion euros in loans on the basis of implementation of a comprehensive and unprecedented reform package. The aim of this programme was to implement structural reforms to aid Greece recover from the economic crisis. According to the European Commission, the end of the bailout programme is accomplished due to the EU solidarity and Greece’s decisiveness. More particularly, Jean-Claude Juncker, European Commission President, mentioned last Monday: “The conclusion of the stability support programme marks an important moment for Greece and Europe. While their European partners have demonstrated their solidarity, the Greek people have responded to every challenge with a characteristic courage and determination. I have always fought for Greece to remain at the heart of Europe. As the Greek people begin a new chapter in their storied history, they will always find in me an ally, a partner and a friend.”
The Chairperson of the ESM Board of Governors announced on August 20 the conclusion of ESM programme as Greece is now a self-sustaibable country with no further follow-up financial packages due to its economic growth prospects. Particularly, Mario Centeno stated: “The ultimate goal of the financial assistance plan and reforms in Greece over the past eight years has been to create a new basis for healthy and sustainable growth. It took much longer than expected but I believe we are there: Greece’s economy is growing again, there is a budget and trade surplus, and unemployment is falling steadily.” What is more, ESM Managing Director Klaus Regling outlined that Greece is the fifth country to exit such a programme but has to further invest on implementing the necessary reforms in order to continue its prosperous economic path.
A new Greek era?
The Greek Prime Minister was very optimistic in his televised speech yesterday. Mr Tsipras said that “today is a day of redemption, but it is also the start of a new era”, clearly referring to the exit of Greece from the bailout programmes which was accomplished by his government. It is quite certain that Alexis Tsipras will use it to gain back momentum after the catastrophic wildfires which have costed many lives and shown the inadequacy of the Greek government.
Furthermore, Mr Tsipras stated that “we must remember that the return to Ithaca is not the end of the adventure” showing that this bailout exit does not mean that everything is over but Greece should proceed to more reforms. Besides, the EU and EC will always be there to ensure that Greece will repay its loans to its full.
Too difficult to maintain economic growth and surpluses
This should not be a cheering moment for Greece as many challenges remain to be dealt in the decades to come. Constantine Fraser, European analyst at research firm TS Lombard, told CNBC via email that “both the EU and the Greeks will try to put a positive spin on the end of the bailout, but there is little to celebrate”. Furthermore, Ricardo Garcia, chief euro zone economist at UBS, told CNBC that there is much more to be done and structural reforms together with fiscal discipline need to stay in place.
The fact that the Greek government has to focus on a very strict programme and ensure budget surplus of at least 2,2% of GDP till 2060 the moment that its accumulated debt stands at around 180% of GDP makes things look ominous.
All in all, it is very promising that Greece managed to get out of the bailout programmes after all these years of financial support but the Greek government should not only not stay assured but also understand that there is still a long and hard way to go.
Thus, it is not time to cheer up but make sure that this will have a positive effect on Greek citizens’ everyday life.
[…] European Stability Mechanism (ESM) provided the bailout worth €61.9 billion for three years as an effort to help the Athens administration reform the economy and recapitalize […]