“Greece’s plans for a clean exit from its international bail-out are in disarray. A sharp rise in bond yields has stymied the government’s plan to borrow about €9 billion abroad in 2015 to meet debt repayments and ease the impact of austerity measures,” says a recent Economist report.
This leaves Greek Prime Minister Antonis Samaras in a tough spot: he will soon be required to negotiate a new loan from the European Union and to get rid of the IMF. Otherwise, he will have to accept 12 million euros from the IMF and place Greece under its strict supervision for an additional 15 months.
Samaras speaks at length about economic growth as he foresees more foreign investments coming to Greece. After a record summer tourism season, international hotel chains are seeing many investment opportunities on popular Aegean Islands. TAIPED, the Greek privatization agency, is considering three bids from international groups seeking to manage 14 regional airports. China’s COSCO group is devoting €230 million to enlarge its container-handling terminal at the port of Piraeus. According to the EU and the IMF, Greece’s economy will grow by 0.6% this year and 2.9% in 2015.
However, the coalition government is under unrelenting pressure from the leftist opposition party SYRIZA to put a stop to privatizations of state property. International markets see Greece’s prospects clouded by political instability. The New Democracy/PASOK coalition remains 25 votes short of being capable of electing a president of the republic in February 2015. At the same time, some PASOK MPs have expressed interest in switching camps and cooperating with SYRIZA. The position of the leftist party – which enjoys a clear lead in the polls – currently breeds insecurity in international markets and causes panic among foreign investors.
Meanwhile, 40-year-old SYRIZA leader Alexis Tsipras has been building bridges with EU leaders in Brussels and Berlin. He is still pressing for Greece’s creditors to write off at least half the country’s sovereign debt – now almost 175% of GDP. But European officials say he is no longer the extreme leftist who promised in 2012 to tear up the “barbarous memorandum” if he came to power. Tsipras “has quietly tried to reassure potential investors bringing in money from abroad that Greece would be a business-friendly member of the euro zone under a SYRIZA government. The hedge funds that led the recent stampede out of Greek bonds have yet to be entirely convinced,” the report concludes.
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