The international banking group HSBC has joined the European Commission and Bank of Greece in doubts that Greece can make a so-called “clean exit” from 326 billion euros ($392.78 billion) in three bailouts that will expire in August.
HSBC agreed with central bank Governor Yannis Stournaras that a precautionary program or increased monitoring will be necessary for Greece once the country has emerged from eight years of rescue packages as harsh austerity measures will continue and fiscal goals have to be met to avoid triggering automatic spending cuts.
Prime Minister and Radical Left SYRIZA leader Alexis Tsipras said he has brought the country to recovery, ironically without noting that if that comes to pass that it would be because he reneged on anti-austerity promises to reverse big pay cuts, tax hikes, slashed pensions and worker firings his Administration has continued.
In statements to the Financial Times in London, HSBC regional analyst Fabio Balboni said, “For a number of years, there has been concern about a possible Greek exit from the eurozone. But, having regained access to markets last year, in 2018 Greece might exit its bailout program instead, after eight long years, and nine finance ministers.”
He conceded that a so-called “clean exit” could be feasible, at least for a period of time, but did warn that “a precautionary program, or at least ‘enhanced’ post-program surveillance, might be needed to ensure Greek bonds remain eligible in the ECB refinancing operations,” as Greece is “still far from an investment grade and remains excluded from the QE program.”
He was referring to the European Central Bank, which, along with the European Union and European Stability Mechanism makes up the EU-ECB-ESM Troika that put up 86 billion euros ($103.62 billion) in a third bailout Tsipras said he would never seek nor accept but did both, along with more brutal conditions on workers, pensioners and the poor.
Tsipras earlier said the country will make a successful return to markets this year. A test bond of 3-billion euros ($3.61 billion) sold in July, 2017 but at interest rates more than three times higher than the cost of the bailouts, a foreboding harbinger.
Stournaras and Tsipras’ Administration, which includes the pro-austerity, marginal, jingoistic Independent Greeks (ANEL) have been feuding for the last three years over the country’s crushing economic crisis as he has downplayed the Premier’s boasting he’s brought a recovery, ironically by reneging on anti-austerity vows.
Stournaras said a contingency plan should be in place in case the country can’t make a successful return to markets as a way to boost investor confidence and lower borrowing costs but ran into a SYRIZA buzzsaw.
Stournaras was described as a “failed minister,” referring to his tenure as Finance Minister in a former New Democracy-led coalition with the former PASOK Socialists in which he backed austerity – as has Tsipras and his ANEL partner, Defense Minister Panos Kammenos.
“Just because a failed finance minister from a failed government had favored a credit line instead of a return to markets does not mean that a successful government can’t do things better,” a government statement said.
The European Commission’s mission chief to Greece earlier said the government should stop talking about a “clean exit” from the bailouts.
Tsipras has spouted the term “clean exit,” but the reality could be a lot messier, Costello suggested. Tsipras has committed to more pension cuts and taxes on low-and-middle income families past the bailout end as well as automatic cuts that could be triggered if the government fails to hit fiscal targets as it almost always has.
“Now we want to see action,” Costello told the Greek Economy 2017 conference at the American-Hellenic Chamber of Commerce, noting that Tsipras’ government has been slow to deliver on past promises and as unfinished reforms and measures drag on as he tries to mollify an audience that’s abandoned him for reneging on anti-austerity vows.
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Source: thenationalherald.com
