Mitsotakis Pledges Early Repayment of Greece’s Bailout Loans

Prime Minister Kyriakos Mitsotakis pledged on Tuesday that Greece will make an early repayment of 5.3 billion euros of bilateral bailout loans from European countries by the end of the year.

This pledge for repayment ahead of time is a commitment to investors, he underlined during an interview with Bloomberg. The Greek premier added that he intends to render the country a very attractive destination for foreign investments.

Mitsotakis won a resounding majority last month for another four years in office, giving his conservative administration a mandate to implement investor-friendly policies he’d touted during his campaign.

Greece’s Repayment of bailout loans a nod to investors

That will mean chipping away at Greece’s €356 billion of debt, the highest relative to output in the euro area. “I want to continue making Greece a very attractive destination for foreign investment,” he said.

“It’s a commitment to investors,” Mitsotakis added. “This is not just about management. It’s not just about playing defense. It’s really about changing the country.”

“The first goal, and I think it’s a very tangible goal, is to get to investment grade before the end of the year,” the PM stressed.

Rating agency Moody’s Senior Vice President Steffen Dyck said recently that New Democracy’s election victory was credit-positive. A second four-year term under Mitsotakis “will ensure continuity in fiscal and economic policies. In particular, continued focus on improving the business environment and banking sector health,” he said, according to Reuters.

Mitsotakis set out a series of plans and objectives for the next four years that aim to consolidate the country’s position in the European Union after years of economic hardship.

He pledged to bring incomes for Greeks significantly closer to their European peers and to accelerate the pace of debt reduction while boosting the use of renewable energy and increasing exports to 60% of gross domestic product from 50%.

Positive outlook for the economy in Greece

According to the projections from the Bank of Greece (BoG) the recovery will continue after 2023 with growth projected at 2.2% in 2023, 3% in 2024, and 2.7% in 2025.

In its annual Monetary Policy Report 2022-2023 released last week, the BoG says the inflation rate will ease to 4.3% in 2023 from 9.3% the previous year, and will decline further to 3.8% in 2024 and 2.3% in 2025.

The bank’s report noted the continued challenges as regards the goal of real convergence, given that Greece’s per capita GDP corresponds to about 55% of the per capita GDP of euro area countries, compared with about 70% before the debt crisis.

“Catching up requires sustained growth rates well above the euro area average. Otherwise, it could take more than 15 years for the Greek economy to regain its pre-debt crisis level relative to the euro area.,” BoG said.

The prospects of the Greek economy are positive and current conditions support this optimism, newly appointed National Economy and Finance Minister Kostis Hatzidakis said after meeting with Bank of Greece Governor Yannis Stournaras on Tuesday.

“The omens are excellent,” Stournaras affirmed, and noted that a research section of the Bank of Greece – perhaps the largest in the country – will be available to the minister for consultation.

It was also announced that the European Central Bank’s executive board would meet in Athens in October.

Stournaras and Hatzidakis also decided to meet frequently, while Hatzidakis is planning to meet with the directors of systemic banks in Greece next week.

Both Hatzidakis and Stournaras also noted the key importance of maintaining a prudent fiscal policy.