ATHENS, Greece – Greek government borrowing rates dropped to their lowest level in nearly six months as investors welcomed the start of talks between Athens and bailout creditors on how to lighten the country’s massive debt load.
The yield on Greece’s 10-year bonds dipped to 7.69 per cent, the lowest so far this year and around the level when Greece received its first bailout in 2010. Shares on the Athens Stock Exchange closed up 3.2 per cent Tuesday amid gains across Europe.
Eurozone finance ministers formally launched debt relief talks with Greece on Monday after the country’s parliament approved another major package of austerity measures.
In Brussels, Commission spokeswoman Annika Breidthardt said the European Union’s executive branch would offer to help the debt talks and conclude a long-delayed review of Greece’s bailout program. That review is needed for Greece to get the next batch of its bailout loans.
“Greece is turning the page and leaving six years of darkness behind it,” Prime Minister Alexis Tsipras said in a televised address to his cabinet. “At last, a light has appeared for growth.”
But the creditors’ willingness to ease bailout repayment terms came at a heavy price.
Tsipras’ left-wing government is committed to imposing higher taxes on the country’s battered work force, which has endured years of cuts and is still outnumbered by pensioners and the unemployed.
Greece’s debt is expected to peak this year at above 180 per cent of annual economic output.
The latest austerity measures triggered a three-day general strike last week that included large protests and brief but violent clashes with riot police.
Amid growing public discontent, Tsipras has lost his lead to the opposition conservatives in opinion polls. Still, his government passed a painful package of reforms over the weekend in parliament with no dissenting votes from the ruling party and its coalition partners.
“Having passed the crucial income tax and pension reforms … Greece now needs to legislate the remaining third of the upfront package already agreed with the lenders,” Teneo Intelligence analyst Wolf Piccoli said.
“The required next steps are politically doable.”
Online: Eurogroup statement on Greece: http://ow.ly/nDkz3004R1K
Cook reported from Brussels. Follow Gatopoulos at http://www.twitter.com/dgatopoulos