While Greece still hasn’t received a long-delayed nine billion euros ($12.39 billion) in a long-delayed installment being held back by its international lenders, all the signs are there that the money will be coming, along with other benchmarks that show the economy, stuck in the seventh year of a deep recession, may finally be recovering.
That was the assessment by the Wall Street Journal in a piece called Greece Able To Call Its Own Tune, detailing how Prime Minister Antonis Samaras, buoyed by a primary surplus, was able to resist demands from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) to impose more austerity.
Samaras dug in as Greece reached a deal on unfinished reforms, although it’s being held up until the coalition government of the Premier’s New Democracy Conservatives and its partner the PASOK Socialists convince a handful of rebellious lawmakers to support the bill and set aside their objections to extending the shelf life of milk, which the Troika said is needed to make Greece more competitive.
The Journal noted that, “The striking feature of this agreement was the extent to which Athens got its way on vital issues relating to the budget, bank recapitalization and structural reform. That is a mark of how far a recovering economy, buoyant markets and increasing confidence in Prime Minister Antonis Samaras have changed the terms of engagement.”
Greece stuck by its estimates of an economic recovery that were far more optimistic than those of the Troika, including in bank recapitalization with the Bank of Greece saying the country’s four biggest financial institutions will need 6.4 billion euros ($8.81 billion) , far less than what the lenders believe will be necessary.
The WSJ said that key indicators are in Greece’s favor, including that the economy could grow this year, if only by 1.1 percent. Other good signs are that: the PMI manufacturing index is in expansionary territory and consumer confidence has turned positive, car sales are growing, building permits are up more than 70% year-on-year and the tourism industry looks to be heading for another record year.
Also that money is starting to flow back into Greece, lured by the global search for yield: The Athens stock market rose 35% in 2013 and is one of the best performers in the world this year; Greek 10-year bond yields are down to just 6.84%. Piraeus, the market-leading domestic bank, last week even issued €500 million of three-year senior unsecured bonds at a yield of 4.5%.
One of the biggest problems looming on the horizon, an estimated four billion euros ($5.5 billion) funding gapm is shrinking even though the ECB hasn’t turned over profits from its holdings in Greek bonds as promised, helped by banks repaying government aid. Athens is even talking about issuing a bond, raising the possibility it won’t need a third bailout.
Despite all that, however, there hasn’t been any trickle-down effect to those most affected by the pay cuts, tax hikes, slashed pensions and worker firings the Troika demanded and which Samaras imposed.
He has promised to return 500 million euros ($688.43 million) of the primary surplus to low-income pensioners, the military, police and emergency services, a core constituency of his party ahead of critical May elections for Greek municipalities and the European Parliament which show New Democracy behind the major opposition Coalition of the Radical Left (SYRIZA.) That amount is less than half he promised.