The economy of debt-drowned Greece could see growth of between 2.5 percent and 3 percent in two years’ time, the country’s prime minister said Thursday.
Lucas Papademos said during an official visit to Cyprus that current projections suggest Greece’s economic output — or gross domestic product — will start rebounding from five straight years of recession in the second half of 2013.
Papademos said this will happen if the Greek authorities, including a new government to emerge from elections expected early next month, stick to reforms and take additional measures to speed up economic recovery such as introducing job creation schemes.
Eurozone member Greece has avoided bankruptcy thanks to rescue loans from the European Union partners and the International Monetary Fund since May 2010. In return, the country imposed deep spending cuts, slashed pensions and salaries and raised taxes repeatedly.
Papademos said a sizable portion of those rescue loans have been earmarked to boost the liquidity of Greek banks that have taken huge losses after agreeing to voluntarily join a swap deal and accept a deep cut in the value of their Greek government bond holdings.
The swaps aim to forgive Greece just over half its (EURO)205 billion ($268 billion) debt held by banks, pension funds and other private investors.
Papademos said the banks’ recapitalization will begin April 20 and is expected to conclude by early September. [AP]