Greece’s government has said the country is “turning a page” after eurozone member states reached an agreement on the final elements of a plan to make its massive debt pile more manageable, ending an eight-year bailout programme.
“I have to say the Greek government is happy with this deal,” the finance minister, Euclid Tsakalotos, said on Friday. “But at the same time, this government will not forget what the Greek people went through in the past eight years.”
The government spokesman, Dimitris Tzanakopoulos, hailed “a historic decision” that meant “the Greek people can smile again”. Financial markets rallied, with the country’s benchmark 10-year bond easing 0.2 points and the main stock index up 1.6%.
Tsakalotos said the plan, which allows Greece to extend and defer repayments on part of its debt for another 10 years and gives Athens another €15bn (£13.2bn) in new credit, marked “the end of the Greek crisis. I think Greece is turning a page.”
He said the country had “all the building blocks … to turn the agenda away from one of fiscal adjustment … to one of growth”, but added that the government “has to make sure the Greek people quickly see concrete results … They need to feel the change in their own pockets.”
But the main opposition party New Democracy reacted to the deal with scepticism, saying it left much to be desired. Asked whether he thought the €22bn (£19bn) buffer Greece had been given would suffice, the party’s Kostis Hatzidakis said it reflected the lack of faith international creditors had in Athens’ ability to successfully return to capital markets.
With Greece subject to enhanced surveillance for the next decade, reaction on the ground was similarly muted, with most saying they did not think the deal would make any noticeable difference to their lives.
The finance ministers of the 19 eurozone countries needed to finalise a deal between Greece and its international creditors that would allow it to safely emerge from its third and final bailout on 20 August and face the markets again.
Greece had received €275bn in financial support from its international creditors over the past eight years and twice came perilously close to being kicked out of the eurozone group, the EU commissioner, Pierre Moscovici, said, adding: “There have been enormous sacrifices. But at last, after eight years of difficult reforms, of tough adjustments in our programmes, Greece will be capable of moving on its own two feet.”
But it also means the left-led government in Athens will have to stick to austerity measures and reforms, including high budget surpluses for more than 40 years. Adherence will be monitored quarterly.
Greece has been surviving primarily on loans from the eurozone since 2010, when it lost market access to funds because of a ballooning budget deficit, huge public debt and an underperforming economy, matched with an expansive welfare system.
As fears mounted that it would crash out of the euro, the country was plunged into an unprecedented recession from which it is only now starting to recover, posting economic growth of 1.9% this year after its economy shrank by more than 26% since 2010.
The crisis toppled four governments, obliging the current prime minister, Alexis Tsipras, to force through tough changes to balance the books. Wages have fallen by nearly 20% since 2010, with pensions and other welfare payments cut by 70% in the same period. The size of the public sector has been reduced by 26%.
Unemployment has dropped slightly but remains very high at 20%, with youth unemployment at an alarming 43%, sending thousands of young Greeks abroad.
At almost 180% of GDP, Greece is burdened with the highest debt load in Europe. The €320bn debt mountain is widely recognised as the single biggest obstacle to economic recovery.
The International Monetary Fund had resolutely refused to sign up to the country’s latest bailout unless eurozone creditors agreed to a restructuring that would ultimately make the debt sustainable.
Investors have been encouraged by the government’s austerity measures, however, with Greece’s borrowing costs standing at about 4%, compared with 24% at the peak of the crisis.
This article titled “Greece ‘turning a page’ as eurozone agrees deal to end financial crisis” was written by on Henley, Daniel Boffey in Brussels, and Helena Smith in Athens, for theguardian.com on Friday 22nd June 2018 09.41 EDT
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