Greece’s Prime Minister Alexis Tsipras told his cabinet on July 2 that Greece be able to finance its needs after it exits its bailout in August. But the country will not return to the ways of the past that led it to the debt crisis, he said.
Tsipras stressed that the debt relief deal that Athens agreed with its international lenders in June was a decisive step. He said Greece had secured stable access to money markets after its bailout expires on August 20, according to the Reuters news agency.
The cash buffer Athens has built along with its lenders will help it cover its needs for at least two years, he said.
“We have secured a buffer for any potential market turmoil… due to external factors,” Tsipras said. “Therefore, the market exits will be without any funding pressure.”
“This new political path that we are called to embark upon, the new day that we must plan, cannot be a return to the past, to the policies and the choices of the old political system, to the days of corruption and tax evasion,” he said.
Reuters also noted that Greece’s official creditors will help smooth the country’s return to market financing, the Bank of Greece said in a monetary policy report on July 2.
But it warned that in the longer term, debt sustainability will hinge on maintaining fiscal and reform efforts and further debt relief by its euro zone creditors.
“The sustainable return of the Greek state to the international sovereign bond markets will be the ultimate and definitive proof that the economy has overcome the crisis,” the central bank said in its report.
“Any other outcome would undermine growth prospects and give rise to serious problems.”
The Bank of Greece said the Eurogroup’s decision on debt relief ensures the sustainability of Greece’s debt “at least in the medium term” which will have a positive impact on the markets and boost confidence in the future of the Greek economy.
“Long-term sustainability, however, hinges crucially… on the commitment of the Eurogroup to consider further debt relief measures in the event of an unexpectedly more adverse scenario,” it said.
The agreement on debt relief also envisages primary budget surpluses of 3.5% of GDP until 2022 and 2.2% from 2023 to 2060.
“No other country in the world, with the possible exception of oil producing countries, has ever achieved such large primary surpluses over such a protracted period of time,” the central bank said.