Still, important steps need to occur before an exit from the bail-out can be achieved.
He may be able to benefit from this boost to his political capital by calling early elections before politically painful pension cuts take effect. It would demonstrate his success in enabling Greece to put its financial crisis behind it and to grow without outside assistance or monitoring from international institutions. The political appeal of such a ‘clean exit’ to the left wing-led coalition government of Alexis Tsipras is clear. The government plans to build a cash buffer of €18bn through subsequent issuances to strengthen its chances to exit the bail-out without needing a further external financial safety net. Unemployment remains the highest in Europe but has dropped substantially, and what was once the highest budget deficit in Europe has been turned into a surplus.Īll three main rating agencies have upgraded Greek bond ratings since the start of the year, supporting substantial drops in government bond yields and enabling the government to test the waters of its planned return to the markets with a long-term bond issuance in February. After emerging from a decade-long recession last year, the Greek economy is forecast to grow by around 2.5% this year and next. The economic backdrop underpinning the government’s confidence seems impressive at first sight. Improvements in the real economy are intensifying the Greek government’s belief that the country will be able to rely on market financing without the need for further financial assistance from official lenders once its €86bn bail-out, the third since 2010, expires in August.
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