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The positive results of the European Central Bank stress tests on Greek banks prompted Antonis Samaras to say, “step by step, and on a steady basis, we are coming out of the crisis… a new Greece is born, proud, economically strong, and just.”
The coalition government is optimistic that the economy will be boosted as there will be more liquidity in banks, allowing for much-needed lending to struggling businesses. This will lead to the ambitious target of 2.9% GDP growth the government has set. At the same time, the results of the ECB stress tests will leave the 11 bln euros of the Hellenic Financial Stability Fund at the government’s disposal to use as they see fit.
The 11 bln euros can be used as a cushion in case Greece exits the bailout programme early but cannot cover the 2015 budget shortfalls by borrowing from the international markets.
It can also be used to pay a portion of the sovereign debt, thus bringing it down by a few percentage points and making it sustainable, as the debt currently stands at a total of 320 bln euros. However, the troika evaluation in November will include thorny issues that will hardly be resolved by then. The reforms the troika wants on “red” loans, salaries in the public sector, changes in labour laws, new union legislation and retirement funds are not easy to be implemented. Especially with Samaras pushing for an early exit from the bailout programme.
Therefore, it is certain that Greece will remain under some sort of watch from its creditors. What the prime minister is hoping to achieve is to put an end to austerity measures and negotiate a new agreement that will have a different name than the much-loathed “memorandum.”