Debt deal for Greece: Experts worry if it can be implemented
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Yesterday's last-minute 86-billion-euro bailout deal for Greece has restored global financial-market confidence, but implementation of the agreement remains a cause for concern, according to Bangkok-based experts on the Greek debt crisis.
Greece reached the desperately needed deal after 17 hours of marathon negotiations with euro-zone leaders, preventing the country from crashing out of the single currency.
Greek Prime Minister Alexis Tsipras agreed to tough reforms in return for the three-year lifeline, his country’s third rescue programme in five years.
“EuroSummit has unanimously reached agreement,” European Council president Donald Tusk said.
“All ready to go for ESM [European Stability Mechanism] programme for Greece with serious reforms and financial support.”
The new effort came after a bitter sixmonth struggle following Tsipras’ election in January that put Greece’s membership in the euro zone on the line.
Usara Wilaipich, a senior economist at Standard Chartered Bank (Thai), said investor confidence was expected to return after Greece was allowed to restart talks on financial aid through the euro zone’s bailout fund.
Global financial markets were worried about a “Grexit”, or Greece’s potential departure from the euro zone, which could have seriously hurt markets and posed a barrier to the recovery of the global economy, she added.
Excluding Greece, the overall European Union economy has shown good signs of rebounding, reflecting a more stable outlook for public debt and the trade balance.
The EU’s gross domestic product this year is expected to gain steam with a growth rate of 1.5-1.6 per cent, up from 0.9 per cent last year.
Global investor sentiment will turn brighter because of the Greek bailout deal and if Thailand can boost economic growth in the second half of this year, foreign funds are expected to flow back to the equity market, Usara said.
However, Amonthep Chawla, head of research at CIMB Thai Bank, said financial-market jitters had been calmed, but it remained to be seen if the Greek government could manage the reform regime successfully.
“The agreement has just eased market volatility, but we should not be overconfident. Greece also has a massive asset-privatisation issue [worth billions of euros], for which there is no guarantee that the Greek government will be able to deliver,” he said.
If there were no bailout deal yesterday, Athens would have been compelled to print its own currency and in effect leave the euro zone, as its banks were about to run dry from a lack of extra funding by the European Central Bank.
“Grexit has gone,” European Commission President Jean-Claude Juncker said, ruling out the threat of Greece leaving the single currency.
Tsipras insisted the deal was good for Greece despite the fact that the austere terms were nearly identical to those rejected by Greeks in a referendum just one week ago.
“We fought a righteous battle to the end,” a smiling Tsipras said. Despite the deal’s harshness, the “great majority of Greek people will support this effort”, he said.
Asian markets rejoiced at the news of the debt deal, after a torrid few weeks while traders waited for an accord.
