Stournaras conveys Europe’s optimism

Finance Minister says Eurogroup meeting saw Greece in a positive light and expects it to pull through By Nikos Chrysoloras and Sotiris Nikas

Finance Minister Yannis Stournaras spoke of widespread optimism following the Eurogroup meeting on Monday, and hope across the eurozone that Greece will pull through, a sentiment shared by the head of the Institute of International Finance (IIF).

“For the first time in a Eurogroup, Greece was not spoken about in a negative manner,” the minister told Parliament on Wednesday, two days after eurozone finance ministers took less that 10 minutes to approve the disbursement of 9.2 billion euros in bailout funding.

“There is great hope and optimism that Greece will make it, which is obvious from the speeches of ministers,” he said. “There is a sense of prevailing optimism after a long time about the situation in the eurozone.” Stournaras also referred to the drop in the spreads between Greek and German 10-year bonds: “There is a reduction in the spreads, as the difference in rates has dropped to the levels of 2010. But this will not distract me; we have just reduced the speed with which we are heading toward the rocks. We are now trying to turn the ship around.”

Data released by Eurostat yesterday on the debt of European Union member states in the third quarter of 2012 showed that Greece’s pile remained the largest in the bloc in proportion to its gross domestic product: In the July-to-September period, Greek debt amounted to 301 billion euros, or 152.6 percent of GDP. On an annual basis the Greek debt went down by 11 percentage points thanks to the debt restructuring (PSI) last spring. Compared with the second quarter, however, it went up by 3.4 percent of GDP.

Charles Dallara, head of the IIF, argued that Greece will be able to return to the markets and draw funding from end-2014 or early 2015.

In the context of his participation at the World Economic Forum in Davos, Switzerland, Dallara told Bloomberg Television on Wednesday that “this government is showing that it will make it and if it marches on unhindered it will manage to restore the climate of trust toward Greek economy.” He added that the country is steadily fulfilling commitments to its creditors that will allow it to return to the markets.