This is the first time that Greece is ahead of developments and is awaiting the eurozone and the International Monetary Fund – its creditors – to meet their commitments and disburse the bailout installments due for the rest of the year, as the government has fulfilled its obligations, according to a weekly report by Alpha Bank on the course of the country’s economy.
The bank’s analysts note that the most significant developments from now on will be the payment soon of the bailout tranches and how those funds will be used.
“Greece, for the first time in a long while, appears to have adhered to what has been agreed according to the Memorandum [of Understanding] for 2012,” the report, published on Thursday, notes. This has been achieved despite the fact that the recession has been greater than forecast and even before the arrival of the promised sum of 44 billion euros in loans from the support mechanism.
The bank report adds that the credibility deficit cannot be reversed overnight, but Greece’s image has shown a significant improvement in the past few months.
Regarding the execution of the budget, Alpha Bank stresses that it is very likely that the primary deficit of the government this year will not exceed 1.8 billion euros, against the creditors’ estimates for 4.01 billion euros. “There is a clear need for the Greek economy to be allowed to operate again under normal conditions,” the report notes, in a message that is aimed abroad as much as it is aimed here.
The report goes on to suggest that the fiscal adjustment measures taken in Greece will have too small an impact for the necessary reduction of fiscal deficits or the creation of a primary surplus, and that these measures will have a disproportionately big effect on deepening and extending recession. It adds that the extension of the adjustment period is accompanied by a “provocative underestimation” of the impact of drastic measures aimed at cutting expenditure and increasing public revenues that are already being implemented in Greece.