The head of the European Stability Mechanism, Klaus Regling, has issued a clear warning to the Greek government that it should remain focused on implementing the prescribed reforms or else the markets will punish Greece.
Addressing a dinner for the 90th anniversary of the Hellenic Bank Association on Tuesday, Regling stressed that Greece’s access to the markets “remains fragile” and the restoration of investor confidence requires a full commitment to reforms – although even that may not suffice in Greece’s case, as he claimed.
He added that the recent market turbulence due to external factors has had a negative impact on Greek spreads. “The only way for dealing with the situation is a lasting commitment to reforms, a parameter without which Greece cannot achieve a strong economic performance, let alone sustain it,” the eurozone official said.
Regling also noted that discussions are particularly focused on the debt relief measures. He said it would have been better had the talks focused on Greece’s reform efforts, given that this is what will eventually convince investors.
The ESM chief expressed confidence that there would be an agreement on the medium-term measures to ease the Greek debt at next week’s Eurogroup meeting.