Greece Buoyed By Falling Interest Rates, Recovery Hopes

New Democracy chief Kyriakos Mitsotakis

ATHENS — Greece is regaining “lost credibility” shredded after the economic crisis, making a return to the bond markets possible for the first time in four years, the minister in charge of a massive public sector overhaul said.

Administrative Reform Minister Kyriakos Mitsotakis painted an image of a country turning the corner on its troubles. The man who presided over the cuts demanded by Greece’s bailout creditors spoke as a further drop in borrowing rates buoyed the government ahead of an expected bond issue that could come as early as this week.

“Significant progress has been made over the past couple of years on the fiscal consolidation front,” Mitsotakis told The Associated Press in an interview, noting that the country had posted a “remarkable primary surplus” — the budget excluding interest payments on outstanding debt.

“This has allowed us to re-establish lost credibility and place us in a position where we should be able within the foreseeable future to tap international capital markets,” he said.

Not everyone is convinced. Unions were to stage another 24-hour anti-austerity general strike April 9 that was set to affect public and private services across the country.

Still, the figures have been encouraging. The government saw its borrowing costs in a short-term auction fall sharply April 8 — a further sign that investor confidence is growing. The government raised 1.3 billion euros ($1.8 billion) in a sale of six-month treasury bills at 3.01 percent, compared to 3.6 percent in March.

Bailed-out Greece has been absent from the bond markets since 2010, and recently promised to return by the end of June — earlier than expected — raising some 2 billion euros with 3- or 5-year bonds.

No date has been set, and government officials refused to comment on reports that the bond issue could take place this week, with Deputy Finance Minister Christos Staikouras saying only that Greece was on “a return trajectory” to global markets.

But despite the improved figures, Greece is still suffering from what Mitsotakis called “the legacy of an unprecedented fiscal contraction.” The country’s economy has shrunk by about a quarter over the past four years, and unemployment hovers at 28 percent.

Unions called a general strike April 9 to protest the ongoing income cuts, tax hikes and record-high unemployment. The protest is set to halt trains and ferries, close schools, and leave public hospitals running on emergency staff.

Mitsotakis said the dissatisfaction is “only natural.”

“We never promised miracles and we never said the situation is going to dramatically improve from one moment to the next,” he said.

“Having said that, if you just compare Greece today to where it was two years ago when the whole topic of discussion was not Greece’s remarkable comeback but whether Greece would be able to stay within the Eurozone, I think that the progress has been overall quite remarkable.”

Greece has relied on billions of euros in rescue loans from the International Monetary Fund and other European countries that use the euro as their currency since 2010. In return, it has had to impose a series of deeply resented austerity measures.

Greece sold its last long-term bond in early April 2010, a month before the bailout deal, when it paid 5.9 percent for a 7-year issue. Ten-year borrowing costs are now at the lowest since early 2010.

However, major ratings agencies still list Greek bonds as below investment grade, and two years ago the country forced private investors to take a 75 percent loss on their Greek bond holdings.

(Elena Becatoros and Nicholas Paphitis)