Greece wants to rewrite its economic history after years of crisis: it starts with debt and the payment of charges even in advance. There is confidence among investors.
Greece is trying to rewrite its history, after the many chapters dedicated to its serious financial crisis and its enormous debt, the largest in Europe.
Prime Minister Kyriakos Mitsotakis is accelerating reforms at the start of his second term. He seeks to capitalize on a dominant majority to turn the corner and revive the country after years of dire woes.
Mitsotakis won strong support last month to rule for four more years, giving his conservative administration a mandate to implement investor-friendly policies as promised during his campaign. This will mean eliminating Greece’s €356 billion debt, the highest in the Eurozone. “I want to continue making Greece a very attractive destination for foreign investment”, he said.
Greece’s economic challenge is enormous: removing fragility, restoring confidence in the markets, erasing inequalities. And competing with Italy, another nation with chronic debt problems.
Greece promises to turn the page on debt
As he begins his second term, Mitsotakis promised to pay back two years of bailout loans ahead of schedule. This is a bullish sign for financial markets, starting his tenure at the right pace.
The prime minister said he plans to regain Greece’s investment grade sovereign credit rating this year, 13 years after it was lost at the onset of a long and painful financial crisis. The 55-year-old premier also vowed to accelerate his efforts to improve the Greek economy and reduce its debt burden.
“I want to continue making Greece a very attractive destination for foreign investment”, he said. “Not only are we focused on growth, but we also want to make sure that our debt to GDP ratio continues to decline at a very rapid pace”.
Greece’s two-year bonds also rallied following Mitsotakis’ comments.
The early repayment of the so-called Greek Loan Facility will mark a symbolic step for Mitsotakis, as he looks to consign years of financial turmoil that saw his country nearly lose its place in the European Monetary Union in the past and left him as the only euro area member with a junk rating.
Moody’s Investors Service and Scope Ratings both said Mitsotakis’ election victory was a positive event for the country’s credit.
Investors have focused on Greek bonds this year with the expectation that the nation will regain investment grade, making them the best in the developed world. This has lowered the nation’s borrowing costs to such an extent that it now pays less than Italy, even though Rome’s debt is considered safer by rating agencies.
Greece’s 10-year bond yield has fallen nearly 80 basis points this year to 3.7%, compared with a 10 basis point decline on the equivalent German banknotes to around 2.5%. The yield spread between the benchmark bonds Greece and Italy reached minus 50 basis points, the lowest ever recorded.
Original article published on Money.it Italy 2023-07-05 13:10:14. Original title: Così la Grecia vuole attrarre gli investitori: sarà svolta sul debito e sfida all’Italia?
