Eurogroup chief Centeno: ‘I see enormous potential in Greece’

Greece has enormous potential and is getting ready to stand on its own feet when it exits its EU bailout in August, Eurogroup leader Mario Centeno told the AthensMacedonian News Agency (ANA) in an interview.

The Portuguese finance minister explained that Greece is building a significant buffer to protect itself against turbulence in the financial markets.

Greece has entered its eighth year of adjustment. Such a long period of economic, social and political fatigue has left a mark on the economy. It was a very difficult process, in particular for the Greek people.

But Greece is a different country today. Structurally, there were critical improvements vis-a-vis the future. Nearly every sector of the economy was reformed, modernised and made sustainable. The budget deficit was reduced from 15% in 2009 to a surplus now. These are landmark achievements that many countries could look up to.

But eight years was too long a process. A stronger ownership of the process of adjustment by Greece could have delivered much sooner some of the good results we see today. Ownership has played a key part in regaining the confidence of investors and European partners in the last couple of years. It also helps to explain the rebound in growth. I hope this trend of sound policies will remain because I want Greece to continue to prosper. I see enormous potential in Greece.

We are working with Greece towards a successful completion of the programme. The debate about the day after hasn’t started yet. At this point, the only thing I can say is that it is critical to preserve the growth-enhancing structural changes implemented during the programme. The postprogramme framework will be discussed later, alongside possible new debt relief measures. I look forward to seeing the holistic long-term growth strategy the Greek government is preparing. This is the way to go. Greece is taking the helm.”

Greece is getting ready to stand on its own feet. It is now following the best practices of financial assistance programmes in Europe. It is implementing the programme it agreed to with no delays. It is building a significant buffer to protect itself against any unforeseen events in the financial markets for over a year. It is rebuilding its name in the credit market, issuing bonds again. We also welcome the sense of discipline and clarity in communicating with the markets that help to improve credibility.

But this is a gradual – not an automatic – process. Greece remains sensitive to domestic and external shocks. But it is doing the right thing, by ensuring to the maximum extent possible that it will maintain market access after the programme. If the conditions are met for additional debt relief at the end of the program, the Eurogroup – as was unanimously agreed – stands ready to help with this process.

The process of debt relief in Greece has run in parallel with financial assistance due to very favourable lending terms of these loans. Also, Greece has received several sets of official debt relief resulting in big savings for the Greek budget. The debt has also benefitted from a haircut of privately-held debt. This has made debt more sustainable which is also positive for all EU creditors. In the coming years, there will be no debt overhang, but in the medium to long-term, Greece will see important repayment needs. This is why we are looking at the debt issue again.

We decided in January to start the technical work on new debt relief measures, namely on the growth adjustment mechanism. The so-called French mechanism would allow Greece to reduce its debt repayments if the economy underperforms. All additional debt measures will be developed first at the technical level. They will only be adopted if two conditions are verified: the programme has to be concluded successfully and debt relief must be necessary for the Greek debt to be considered sustainable. For that, we need a proper analysis, which will be done by the institutions. That moment has not come yet.