The Greek economy is not out of the woods just yet as its emergence from the ongoing crisis, which is hoped for this year, depends on whether or not it can bring the budget’s primary surplus down to zero, Finance Minister Yannis Stournaras said on Thursday. At the same time, the International Monetary Fund stressed the eurozone’s commitment to take measures to reduce Greece’s debt, a possibility that Stournaras is also eyeing.
In an interview with Reuters, the Greek finance minister warned against complacency, saying: “What scares me is the big pressure from society, media and parliamentary deputies from all parties to ease the program. We must resist... it’s too early to declare victory.”
“We are facing a huge crisis; we have not yet left the hot zone of bankruptcy,” he said. “We are doing better but we can’t say that we have escaped all danger. The year 2013 will determine whether we will.”
This course of the budget this year may also lead to a further reduction in the country’s debt: “The primary deficit is what we are judged on. [Our creditors] expect it at zero but we believe we will do slightly better,” he said. “This means that there is a good chance our partners may further reduce our debt.”
This is also the position of the IMF, which yesterday reiterated that the eurozone will have to take more action in order to render the Greek debt sustainable.
IMF Managing Director Christine Lagarde told Skai TV that as long as Greece fulfills its commitments, the eurozone will not only continue to support the country, but will also “help through lightening the debt in the long term.” Stournaras has ruled out another debt buyback, but believes the load could be eased through other means such as the reduction of interest rates.
However, the biggest concern in Stournaras’s mind appears to be the soaring jobless rate, which could compromise the country’s streamlining effort: “Unemployment is our big thorn,” he said. “There is a time lag between GDP growth and unemployment decreasing and it’s a serious problem, both economic and social.”