Tsakalotos sings the creditors’ tune on market return and reforms
Finance Minister Euclid Tsakalotos appeared on Thursday to toe the line drawn by the country’s creditors, who had said that the government should avoid a hasty return to the bond markets and instead prioritize reforms.
Addressing The Economist Conference at Lagonissi in southern Athens, Tsakalotos stressed “we do not want to return too early, but when we do we wish to ensure that the markets know that this is part of a strategy.” He went on to note that there a narrative addressed to investors on the country’s growth course.
Tsakalotos said access to markets is a short- to medium-term target and stressed that this could happen even without Greece joining the European Central Bank’s bond-buying program (QE). He went so far as to overturn the government’s previously held view, arguing that it is access to the markets that could contribute toward Greece being accepted into the QE program, with the ECB taking account of the markets’ sentiment.
QE, Tsakalotos said, mainly has a symbolic character and its significance should not be overstated. It would be good for banks, he added, but there are not that many bonds to buy anyway.
Speaking on the same panel, Klaus Regling, the managing director of the European Stability Mechanism, said Greece will return to the markets “before the end of the [bailout] program,” which expires in August 2018.
“If Greece implement the reforms, it will be the next success story,” said Regling, citing the examples of other states that emerged from the bailout process – i.e. Portugal, Ireland, Cyprus and Spain – that now boast the highest growth rates in the eurozone.
Regling criticized the tactics of the first SYRIZA-led government with Yanis Varoufakis at the head of the Finance Ministry, and stressed that Greece has many reforms to implement, and not only up until the end of the program but also beyond that too. The next steps will not be toward austerity but growth, he noted, making special reference of the need for changes in public administration, the justice system, privatizations and the further liberalization of commodity markets. “With these things in place Greece can regain the confidence of the markets,” said the ESM chief.
