The European Commission’s representative in supervising Greece’s fiscal adjustment programme, Declan Costello, today called upon the government to proceed decisively in resolving non-performing loans, which are now considered a key threat to the stability of the Greek banking system.
Speaking to a conference on the Greek economy organised by the American-Hellenic Chamber of Commerce, Costello praised the government for the fact that for the first time in many years, negotiations between Athens and its creditors were completed on schedule.
He indicated that the Commission is optimistic about reaching a political agreement on 22 January, 2018, after Greece passes into law and implements dozens of prior actions this month.
Debt discussion to start in late January
Costello confirmed the intention of Greece’s lenders and partners to take measures to ensure the sustainability of the Greek debt.
He said that the final approval of the evaluation, in late January, will be followed immediately by a four-month period of negotiations on the crucial issue of debt reprofiling.
He said that any debt relief measures will be implemented after the completion of the current bailout programme, in August, 2018.
A long extension of bond maturities and a lowering of interest rates are among the measures that have long been discussed, as Germany and Greece’s other European partners are opposed to a classic write-down, or haircut, on the Greek debt.
No cakewalk after bailout completion
Costello maintained that Greece can achieve a 2.5 percent growth rate next year, even with the high primary surplus targets that creditors have set. He suggested that Greece can increase revenues by adjusting the revenues-expenditures system.
Costello underlined that even after the end of the current adjustment programme, deeply-rooted problems will likely remain for years.
Costello said that completion of the programme and the implementation of structural reforms before it ends will create a positive economic climate, and that Greece is again on its way up after hitting bottom.