While three international bailouts of 326 billion euros ($371.94 billion) ended on Aug. 20 after more than eight years, Greece’s return to the markets is still far off with analysts saying lenders are reluctant because of the ruling Radical Left SYRIZA-led coalition’s lack of credibility.
The government is blaming Italy’s crisis for making investors leery, but analysts who spoke to Kathimerini said political instability, Prime Minister Alexis Tsipras’ talk of giving more handouts in a bid to stop his slide in polls before elections and his trying to renege on reforms agreed with lenders the way he did in breaking anti-austerity vows he made to voters has put the kibosh on a market return for now.
Other obstacles include banks buried under a mountain of bad loans with people hit with repeated pay cuts, tax hikes, slashed pensions and worker firings unable to pay mortgage, loans and credit cards and repeated political scandals.
“The Greek government has been trying for months to attract investors, but this effort has been in vain as the country risk has risen,” an analyst at a major European bank covering Greece told the paper, citing Greece’s reputation one of the world’s most corrupt countries, Tsipras setting the corporate tax rate at 29 percent and a labyrinthine bureaucracy.
“Italy is part of the story but there is also an equally important Greek side,” said Wolfango Piccoli, Co-president of Teneo Intelligence.
“Athens lost its window of opportunity earlier this year because it dithered over the bailout reviews. The decision to exit the program without a precautionary credit line is also a contributing factor. More recently, the back rolling of structural reforms and the campaign mode adopted by the government are also affecting investors’ views on Greece,” he said.
Tsipras’ claim of a so-called “Clean Exit,” has long been dashed with the Troika of the European Union-European Stability Mechanism-European Central Bank (EU-ECB-ECB) and the Washington, D.C-based International Monetary Fund saying the country’s economy will need monitoring fore years to make sure fiscal targets are hit and Tsipras doesn’t try to wiggle out of more austerity.