By V. Kostoulas
[email protected]
“A successful exit from the (memorandum) program is on the horizon, but a sustainable recovery is still not guaranteed,” is the way a spokesman for Greece’s creditors recently put it, a position clearly and definitively differentiating the conclusion of the bailout era with an end to the “Greek crisis”.
Beyond the overly optimistic proclamations by the poll-trailing leftist-rightist coalition over the recent period, Greece’s institutional creditors appear to be walking a “tightrope” vis-a-vis Athens. On the one hand, loans and time have been exhausted in three successive bailout programs, yet on the other hand, creditors have also conveyed a sense that the “Greek problem” has not been solved to its core.
Structural weaknesses that long plagued fiscal policy and current account balances appear to have, to a large degree, been ameliorated. However, major problems remain, such as a ballooning public debt and a failure to effectively deal with the stratospheric level of non-performing loans (NPLs) burdening the country’s thrice recapitalized banks.
The same source warned that although structural reforms have been legislated in Greece in recent years, they have only been partially applied, with some hurdles needing years to overcome, such as the effectiveness of a newly formed independent public revenues authority, smoother licensing for major investments, a still elusive land registry in the country and an overhaul of Greece’s public sector.
According to the same source, two major conditions are necessary for Greece to achieve a sustainable recovery, with one interlocked with the other, i.e. for the Eurogroup to credibly apply measures needed to enure the sustainability of Greece’s debt, and, for the Greek government to implement the fiscal and structural reforms that it has legislated, as part of the ESM program.
Implementing reforms over medium- and long-term basis, especially in the coming years after the end of the program in August 2018, is judged as imperative, the source said.
