Greece braced for eurozone crisis
Greece is taking precautionary fiscal measures in case the political uncertainty in either Italy or Germany deepens, according to the Greek finance minister.
“We don’t know what’s going to happen in Italy, we don’t know what’s going to happen in Germany yet, so there are significant questions,” Dimitris Papadimitriou, Greece’s minister of economy and development, told CNBC.
Greece is on track to end its current bailout programme next August, but it is bracing itself for another EU crisis and subsequent nervousness among European investors.
On the plus side, the Ministry of Tourism said this year would go down in the record books with international arrivals expecting to outstrip 2016’s 28 million visitors by around 2 million.
Significant increases in visitors are now heading to Lesvos and Samos in the North Aegean; Kavala in Eastern Macedonia; the island of Kos in the South Aegean; the Ionian islands of Zakynthos and Kefalonia.
This has taken some pressure off the Greek government.
“I foresee a very clean exit, but what I am saying is that we are making provisions so that in case something happens, not necessarily Greece’s doing, but you know we are in an unstable European Union,” Papadimitriou said in Athens. “One has to be prepared not only for your own house but also for what happens in your neighbour’s house.”
Athens has agreed to continue austerity measures for at least another two years, hoping that poverty will be eased by a return to growth.
GDP grew by an annual rate of 1.3 per cent in the previous quarter, an independent national statistics agency reported this week. This fell short of the ambitious expectations of Athens and the European Union.
The Italian election, due in the spring, might return a rejection of mainstream parties and return a government that tries to divert from tough fiscal rules imposed by the EU.
The end of the bailout programme would mean a Greek return to regular market financing next year. In preparation, Greece launched a bond exchange with private holders in November. Ratings agency Fitch called the process “another step toward the resumption of regular bond issuance”.
Papadimitriou said he would not derail the much-promised talks to restructure Greek debt.
“[Germany] recognised that something has to happen with the Greek debt, even the outgoing finance minister [Wolfgang] Schauble indicated that, in fact, Greece has done what it was supposed to do and more and therefore we have to deal with the Greek debt,” Papadimitriou said.
Tourists are flocking back to Greece. Picture credit: MaxPixel