The New York Times,
ATHENS - Offering the first real hope that Greece could emerge from a six-year
recession, the government on Monday presented a draft budget for next year
forecasting a tenuous return to growth.
The economy, which has shrunk by a quarter
since 2007, is expected to contract 4 percent this year but grow 0.6 percent in
2014, largely the result of an increase in tourism and exports, according to
the blueprint. It also predicted that unemployment would dip to 26 percent from
27 percent.
“This year, the sacrifices have begun to bear fruit, giving the first signs of an exit from the crisis,” Christos Staikouras, a deputy finance minister, told reporters.
The forecast could be a turning point for a
country whose tiny economy threatened the future of the euro zone. It has been
bailed out twice by international agencies and remains racked by the region’s
highest unemployment and frequent public protests over government cuts.
But some economists in Greece doubted that
the economy was improving. Achieving growth of any size would be “very
difficult,” chiefly because there has been no significant increase in
investments, Haralambos Gotsis, an economics professor at the University of
Piraeus, told Greek television.
George Pagoulatos, a professor of European economy and politics at Athens University, was more optimistic. “It’s not inconceivable, it’s feasible,” he said by telephone, “as long as they stick to structural reforms and find some sort of solution to the debt.”
The hedge fund billionaire John A. Paulson
also gave the battered Greek economy a vote of confidence. He told The
Financial Times that he had taken substantial stakes in Piraeus and Alpha
banks. They are both “now very well capitalized” and poised to recover, he said,
adding, “The Greek economy is improving, which should benefit the banking
sector.”
Officials of the so-called troika - the
European Central Bank, European Commission and International Monetary Fund -
which have extended the country two loan packages worth 240 billion euros, or
$325 billion, over the last three years, are expected to propose significant
revisions to the draft budget, as they have done with previous budgets.
Mr. Staikouras predicted a small primary
surplus - a budget surplus not counting debt financing - of 340 million euros
for this year and a 2.8 billion euro surplus for 2014. Greek officials are
eager to show a surplus, since troika officials have said it could be the basis
for discussion of some kind of debt relief.
“We will seek the contribution of our partners in helping toward the lightening of the debt,” Mr. Staikouras said. Greece’s debt is 321 billion euros.
Greece will continue to receive payments from
the second bailout until next spring, when talks are expected to begin with
international creditors on a potential third bailout. That aid would be much
smaller than the first two rounds, to cover an estimated financing gap of 11
billion euros for the next two years.
The country has gradually been paying off
its debts from an account opened last year at the Bank of Greece, and will
continue to do so after it returns to international bond markets in 2014 or
2015. But given the overwhelming size of Greece’s debt, about 175 percent of
its total economy, it remained unclear when Greece will be able to stop paying
off what it owes with borrowed money.
Euro zone officials, in particular those in
Germany, which has contributed the largest share to Greece’s bailouts, have
repeatedly rejected the prospect of a second debt loss for Greece’s creditors
after a write-down of privately held Greek debt last year. Other relief has not
been ruled out, including a further reduction in interest rates and an
extension on maturities on loans.
The International Monetary Fund has been
more open to a possible loss to make Greece’s debt sustainable. And many
prominent economic specialists have expressed doubt there is any other viable
solution for Greece.
In an interview with Der Spiegel of Germany
published on Monday, the billionaire investor George Soros said there was no
other choice. “Everyone knows that Greece will never be able to pay off its
debts,” he said. Mr. Soros added that private investors would return to Greece only
if the “official sector” eased some of its demands.
Talks with troika officials will resume next
week on the progress of Greek economic overhaul efforts, including what to do
about the financing gap of 11 billion euros. After the troika envoys suggest
amendments to the draft budget and issue their next economic review next month,
the budget will go to a vote in the Greek Parliament.
