While officials at the debt management agency prepare to trumpet Greece’s return to international capital markets, for long-suffering Athenians it is just another day marked by anti-austerity protests in the centre of the capital.
The five-year bond issue will be snapped up by investors eager for extra yield. But Greek risk, though diminishing, is unlikely to disappear soon. Here is a quick checklist of informal indicators tracked by local analysts.
1. Street protests: today’s 24-hour general strike underscores continuing resistance to labour market reforms, even though fewer unionists now join the ritual march to parliament. Unions are protesting against a planned overhaul of the legal framework for trade union activity and the lifting of a 30-year-old ban on collective redundancies at private companies. Public sector workers fear another wave of transfers to a “mobility” scheme intended to improve flexibility in the civil service will lead to more sackings.
2. The coalition government’s shrinking majority in parliament: Another deputy from premier Antonis Samaras’s centre-right New Democracy party rebelled during a critical vote on a structural reform package, leaving the coalition with 152 seats in the 300-member house. The radical opposition Syriza party holds a narrow lead in opinion polls, while support for the once-powerful Socialists, the junior partner in the coalition, has sunk below 5 per cent. With New Democracy in turmoil over its rightwing faction’s recently revealed links to the neo-Nazi Golden Dawn party, political stability looks under threat.
3. Challenging the troika: Greek officials have become more assertive towards international lenders since achieving a €2.5bn primary budget surplus, before debt payments, in 2013.
4. Targets: The next €11bn bailout payment from the EU and the International Monetary Fund will be the last sizeable handout. Now that Greece is again able to borrow on international markets, the government may be tempted to abandon unpopular measures or at least slow the pace of implementation. Senior officials already complain that only a handful of cabinet ministers are committed to fully implementing the next round of reforms.
5. Exports: Shipments overseas fell by 7 per cent in February on an annual basis, marking the fifth straight monthly decline. Exporters complain banks are still reluctant to lend. The crisis in Ukraine is already affecting exports to Russia: Greek strawberries destined for Moscow now take a roundabout route through Belarus. Lacking a strong export sector and with consumer spending likely to remain weak, Greece will have to rely on tourism and EU-backed infrastructure projects to promote growth.
6. Privatisation delays: This year’s revenue target has already been slashed from €3.5bn to €1.5bn suggesting that long-awaited infrastructure sales will once again be postponed. Taiped, the independent privatisation agency, struggles to overcome administrative hurdles and entrenched political opposition to disposals at regional and local level. Foreign buyers show interest but in many cases fail to come up with binding offers. Greece has missed annual revenue targets by a wide margin since the programme began in 2011 and could fall short of the existing much-reduced target of €11bn by 2016.
http://blogs.ft.com/the-world/2014/04/greeces-markets-return-sugar-coating-a-harsh-reality/
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