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Stournaras says Greece won’t need third rescue as recovery gains

David Tweed & Marcus Bensasson

Greece, where the euro-area debt crisis erupted more than four years ago, won’t require a third international bailout if its economy continues to revive, according to Finance Minister Yannis Stournaras.

With euro-zone finance ministers converging on Athens today, Stournaras said favorable economic developments will ease bond-market access, with a first issue expected in the first half of the year.

“Up to the moment, we don’t see a need for a third bailout,” Stournaras said yesterday in an interview with Bloomberg Television in Athens. “I think the program money, along with the better performance on the fiscal side, are enough to cover us fully for the next 12 months, and under certain conditions that could continue up to well inside 2016.”

The Athens Stock Exchange rose 0.6 percent to 1335.74 yesterday, while Greece’s 10-year bond yield fell 10 basis points to 6.57 percent, the lowest since mid-2010.

Greek Prime Minister Antonis Samaras has staked his credibility on tapping bond markets this year for the first time since before Greece’s first bailout in 2010. If the European Union’s statistics agency confirms that the government posted a 2013 budget surplus before interest costs, Greece will be in line for more debt relief, Stournaras said.

Dutch Finance Minister Jeroen Dijsselbloem said Greece’s international creditors will decide after the summer on possible further aid, including extending the maturity of existing loans from the country’s 240 billion-euro ($331 billion) bailouts. Greece’s economic situation is improving, and this has an impact on calculations of the country’s debt sustainability, Dijsselbloem said on March 30.

Greece posted a current account surplus last year for the first time since the Bank of Greece’s records began in 1948. The European Commission forecasts gross domestic product will increase 0.6 percent this year after a six-year slump.

Greece will raise about 2 billion euros from state asset sales this year, Stournaras said. The economy will also benefit once lenders start expanding credit to the economy in a “matter of months,” he said.

Samaras’s majority in Greece’s 300-seat chamber was whittled down to just two after he expelled a lawmaker from his party in the early hours of yesterday morning for voting against a bill needed for the country to continue receiving bailout funds. The legislation includes changes to the framework for banks to raise capital.

Lawmakers passed the bill including hundreds of economic reforms, from changing the way banks are recapitalized to allowing pharmacists to open shops inside supermarkets. The final bill watered down a plan to allow some stores to open on Sunday to just three cities.

As a result, euro-area finance ministers may decide to unlock more than 8 billion euros from Greece’s 2012 rescue package, the nation’s second since the crisis began. The tranche also reflects Greece’s progress on privatizing state-owned assets and reducing outstanding debt.

Greece’s bailouts earmarked 50 billion euros for recapitalizing the banks, about a fifth of which remains unused. The Bank of Greece has said the country’s lenders will need to raise an additional 6.38 billion euros of capital after a review of troubled loans on their balance sheets. Two lenders, Piraeus Bank SA and Alpha Bank SA, raised a combined 2.95 billion euros from foreign investors last week.

“I’m quite confident that the whole of the capitalization needs will be covered by the private markets,” Stournaras said. Strong investor interest in capital-raising by Piraeus and Alpha Bank show that there is “huge appetite” for Greek banks in markets, he added.

Eurobank Ergasias SA, the only bank that is controlled by the state following last year’s round of capital injections, is still seeking to raise 2.95 billion euros from private investors. National Bank of Greece SA, the country’s biggest lender, has said it will cover its 2.18 billion-euro capital shortfall by selling non-core assets.

While his “initial tasks and targets” in the job of finance minister have been completed, his continuing in the role “depends on the will of the prime minister,” he said. “I’m finance minister now,” he said when asked if he was interested in becoming a central banker at some time.

[Bloomberg]

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