The Minister of Finances, Yannis Stournaras, who negotiated with the troika for months while expecting better results and primary surpluses from the fiscal management of 2013, is now in a rush.
He is in a rush, as he says, to complete negotiations with the troika, so that there is a deal before the Eurogroup on the 10th of March and the Eurozone’s Council of Finance Ministers simply approves and ratifies the collection of the 8.8 billion euros worth of installments.
Mr. Stournaras professes that “there is no more room for error” as he knows that the cash reserves, which allowed Greece to operate without the funds from the loan installments, are slowly running out.
The Minister states that “it is an achievement for an indebted country to live without borrowed money” but notes Greece ave not yet overcome everything stipulated in the bailout and loan agreements.
He estimates that he will come to a deal in time with the troika, which returns today to Athens. The Finance Minister admits that “there are still unresolved issues, particular in the structural changes”, but he does not consider them that critical or capable of blocking a deal.
Regarding the sale of fresh milk and medicine, as well as other smaller interventions in the goods and services market included in the OECD’s report, the Minister of Finances is optimistic that a deal will be made.
Based on all of the above, Mr. Stournaras estimates that the negotiations with the troika will end before the 10thof March, so that the ensuing Eurogroup is dithyrambic for Greece, as it confirms the fiscal progress of 2013 and initiates the great discussion for the new debt settlement.
The goal is to initiate the discussion for debt settlement immediately, with the swift formation and activation of the special expert committee, which will bring specific proposals to the negotiation table in time.
In essence, Mr. Stournaras – in complete coordination with the Prime Minister Antonis Samaras, is attempting to get Jeroen Dijsselbloem to recognize the Greek people’s effort and the results of the financial policy, while the other goal is to get Wolfgang Schäuble to initiate proceedings for a new debt haircut.
The Minister of Finances stresses that “we undertook the task to cover the fiscal and structural changes, while our partners undertook the funding gap and the debt reduction”, clearly outlining the current “deal” with our European partners. He doesn’t hide the fact that the negotiation will not be easy, that the troika will want to ensure the most it can, because it will not have many opportunities in the future to put the pressure on Greece, under threat of ceasing the funding.
It is commonly accepted though that the achievement of a primary surplus, especially one that exceeded even the most optimistic predictions, is a powerful argument for the Greek government that nobody can deny. Nothing seems capable of blocking a deal with the troika, even if the negotiations appear to be tense, even if that does not appear to be the case.
With the deal almost certain, Mr. Samaras and Mr. Stournaras are anticipating the foreign demands and will want to carry out initiatives beyond the agreement that will confirm the continuation of the reform efforts.
The new plan
Rumors indicate that the Prime Minister will present his new decade-long growth plan to the Greek people in early March.
The plan is based on studies conducted by Mr. Stournaras during his tenure at the Institute of Financial and Industrial Studies combined with studies by other international consulting agencies.
It will be a long-term reorientation plan for the Greek economy, in order to make it extroverted and create the conditions that will attract foreign investments.
According to the Minister “the old, state-funded, introverted model of the economy collapsed and it must be replaced by a new, extroverted one that will be based on exports and private investments”.
Mr. Stournaras considers that the new model of the Greek economy must be based just as much on traditional sectors, where Greece has comparative advantages, as it will in the cutting edge technology sector.
He also underlines his preference for combined actions, capable of highlighting the comparative Greek advantages.
Essentially the business sectors that quality will receive special attention and care.
The selection will be according to certain criteria, such as that of added value to Greek production, their contribution to employment and the export capabilities of select sectors.
Based on the same information, the growth model gives particular importance to new technologies – especially telecommunications, where an explosion of investments and competition is expected; agricultural production and particularly the organic production that integrates advance methods and techniques such as geothermia, aquaculture; in tourism, shipping, recycling, digital delivery of health services from a distance, medical tourism, the production of generic drugs as well as the production of advanced personal care and health products that will be based on domestic raw materials, which in turn will be produced with special are in the Greek country side.
When asked how all the above will be funded, the Minister of Finances explains that Greece will be able to draw about 40 billion euros from the European restructure funds by 2020, which is about 20% of the GDP. He also insists that if they are used appropriately, they will allow the country’s much-needed new production model to emerge.
The critical March
Generally speaking, Mr. Stournaras believes that the conditions for the rebirth of the economy are slowly starting to emerge. He insists that the 10thof March will be the start of a new period. He estimates that the deal with the troika, in combination with the recognition of the financial policy and the commencement of debt settlement procedures, will give a new push to the consistently improved results of the financial policy.
In support of all of the above, he notes that during the first two months of 21014, the country’s good fiscal results are maintained and the first signs of the recovery are starting to show.
These trends will be bolstered as soon as the results of the financial policies are confirmed.
Mr. Stournaras claims that “the markets will open for Greece, international investors will see us differently, opportunities will emerge and investment perspectives will improve” and feels that the time will come when he will hear kinder comments, because until now, he has only faced harsh criticism and negative comments about the taxes and many expense cuts.
Antonis Karakousis
– Originally published in the Sunday print edition
