Greek finance minister: Greek economy will start to recover from 2014

ATHENS, Greece – Greece’s recession-wracked economy should start recovering from next year and its sky-high unemployment rate should edge lower from the end of 2014, the country’s finance minister said in an interview broadcast Thursday.

Speaking on state-run NET television, Yannis Stournaras said the government’s aim was to achieve a primary surplus — a surplus without taking into account interest payments on outstanding debt — by the end of this year. Stournaras said this would allow the country to ask its international creditors for some further debt relief.

“If we achieve a substantial positive surplus, then … we can seek a further reduction in debt,” he said. “That’s what I see as the main goal today …. We owe it to the future generations.”

The official target is for a balance by the end of this year.

Last year, Greece saw its privately held debt cut by more than half in a bond swap. Athens has said that according to an agreement made with its creditors late last year, it could seek a reduction of the debt held by the official sector, such as governments, once it has achieved a primary surplus.

Greece has been relying on billions of euros in international rescue loans since mid-2010 after excessive debt and a huge budget deficit left it facing imminent bankruptcy and unable to raise money on international bond markets.

The crisis raised threatened Greece’s position in Europe’s common currency, raising fears it would be forced out of the euro, the currency used by 17 European Union countries. That in turn could cause mayhem in financial markets and exacerbate the eurozone debt crisis.

In return for its international bailout, the country imposed stringent austerity measures, including sweeping spending cuts and repeated rounds of tax hikes, in an effort to reform its economy. While the measures have reduced Greece’s budget deficit, they have left the country mired in a deep recession, currently in its sixth year, and unemployment hovering at around 27 per cent.

Stournaras expressed the hope that Greece would be able to return to markets at the end of next year. The yield on the country’s benchmark 10-year bond is currently just below 10 per cent, far too high to contemplate a return to markets now. Stournaras hoped that rate could fall to below 6 per cent next year.

“I see recovery from 2014 onwards,” Stournaras said. “The climate has already turned. At the moment the international factor sees that Greece is being saved, that it remains in the euro.”

The minister said unemployment would take longer to fall — it is a lagging economic indicator — but that improvements should be visible by the end of next year.

“The reduction of unemployment doesn’t immediately follow recovery,” he said.

Stournaras also reiterated a promise to austerity-weary Greeks that they would not have to endure any new measures — as long as the ones already promised are implemented.

“As long as we keep to the measures we have promised, there is no need for new measures,” Stournaras said. “There will be a need if for some reason we don’t take one or more of the measures we have promised to take.”