Despite much talk of the need for yet another bailout, Greece’s finance minister remains relentlessly optimistic about his country’s economic recovery.
In an interview on Monday, Yannis Stournaras said Athens could even start to test the waters by borrowing money again on the international debt markets as early as the second half of next year.
He acknowledged that first it would have to return to growth in the early part of 2014 and manage to achieve a primary budget surplus.
The Greek economy is in tatters, with unemployment running at over 27 percent of the workforce with almost two thirds of young people without a job and not many economist share Stournaras’ view.
Even he concedes Greece will probably need a further 10 to 11 billion euros in “extra support” from its eurozone partners next year.
Athens faces a funding gap of about 11 billion euros in 2014-15 after its current bailout programme ends in the first half of next year and its eurozone partners have pledged additional support until it can tap the bond markets again.
But Stournaras did say that said Greece did not need a second debt haircut – that is investors losing part of their investment – because Athens could reduce its debt burden by other means such as easier terms on its current international rescue packages.
Meanwhile in Germany, Chancellor Angela Merkel was trying to reassure nervous voters ahead of the election there.
With Germans fearful they will foot the bill for more bailouts, Merkel is not ruling that out, but insisted it was too early to discuss additional aid.
Speculation that Athens may need a new bailout has heated up after recent comments by German Finance Minister Wolfgang Schaueble as officials lay the political groundwork for fresh aid to Greece.
Greece and its international creditors expect the economy to contract by 4.2 percent this year – though the central bank sets that figure at 4.6 percent – before a mild recovery sets in in 2014. The economy shrank 6.4 percent last year.
Greek central government debt rose to 321.6 billion euros at the end of the second quarter from 305.5 billion in December but the finance ministry said on Sunday that rise was not a surprise but the result of funds borrowed to recapitalise Greece’s top four banks in June to restore their solvency ratios.
The finance ministry said that debt was offset by shares the Greek state now owns in the recapitalised banks, which it estimates will fetch 17 billion euros.