Government upbeat about economy

The government said Wednesday that the latest developments regarding the economy allowed for optimism that the recession this year will ultimately prove shallower than originally foreseen.

“The latest developments in the economy are definitely on a positive keel and I hope they will continue to remain positive,” Finance Minister Yannis Stournaras told Parliament. “Fiscal developments are in line with the targets, but also production data – particularly in tourism – allow for optimism that if we continue on this course, the national product this year will exceed projections,” he added.

Separately, Alternate Finance Minister Christos Staikouras presented data to Parliament showing that Greece’s public debt would have reached 380 billion euros, or 208 percent of GDP, without the two successive restructurings of 2012 – under the Private Sector Involvement (PSI) initiative and bond buybacks.

By contrast, the country’s debt this year will come to 320 billion euros, or 174 percent of GDP. Staikouras pointed out that the debt will keep climbing as long as Greece continues to have primary deficits that are covered by borrowing. Additionally, “as long as the recession deepens, public debt as a percentage of GDP will also increase,” he argued.

According to the data, the budget deficits in the 2010-13 period totaled 70 billion euros, of which 26 billion was in 2012-13 alone.

“The problem of the viability of Greek debt remains open and all parties have to approach this real and major problem with a cool head, realism and truth,” he said. For the country to bring an effective halt to the upward trajectory of the debt and reverse the trend, it has to achieve sustainable primary surpluses and orient economic policy toward growth. It could seek to enlist the help of its EU partners.

“As long as we are consistent with our commitments, we shall demand, according to the decisions of the Eurogroup in 2012, the tangible contribution of our partners in lightening public debt. We shall seek the best through negotiations,” he said.

He noted that after the PSI, the largest part of Greek debt is in the hands of the country’s partners and the Eurosystem, and this has strengthened Greece’s negotiating potential.