Greece opened its Christmas stockings early this year withan unexpected debt rating boon and European Central Bank support but analystswarn that risks remain in the troubled nation’s fragile fiscal recovery.
A day after ratings agency Standard and Poor’s gave Greece’ssovereign debt a six-notch ratings hike, the ECB on Wednesday said it wouldagain accept Greek bonds as collateral for central bank loans.
This followed the release of a first batch of European loanson Monday that broke a six-month freeze in Greece’s bailout payments broughtabout by reform delays and a protracted electoral campaign.
Finance Minister Yannis Stournaras on Wednesday hailed theS&P upgrade in parliament, which he said was “unexpected” but welcomenonetheless, while the Athens stock exchange jumped by 4.81 points with banksgaining 9.65 percent.
“The six-point upgrade by Standard and Poor’s createsfeelings of confidence. We had not expected it,” Stournaras said.
“It is another reward, a first step of recognition for theefforts and sacrifices of the Greek people,” he added.
Greece on Wednesday drew another 16 billion euros inEuropean loans after a decision by EU leaders last week to unblock a total of49.1 billion euros from the country's outstanding financial assistance packageby early next year in return for a new austerity deal in Athens.
Another 11.3 billion is expected by the end of the week.
The money is intended to help the government repay some ninebillion euros owed to state suppliers in Greece and abroad, complete asovereign debt buy-back and recapitalise Greek banks that took a hit in a debtwrite-down in the spring.
“The (EU) agreement provides quite a significant window ofopportunity to the country and the government to focus on strategies tostabilise the domestic economy,” said Platon Monokroussos, head of financialmarkets research with Greece's third largest lender Eurobank.
“Of course risks remain but overall it appears that there isa notable shift in market perceptions over fiscal solvency and the country’sstanding within the common monetary union,” he told AFP.
‘Greece has a chance now’ --
“Despite the austerity, Greece has a chance now,”Monokroussos said.
In another sign of returning stability, bank deposits alsolook to be heading back to Greece after bank-customer panic six months ago,when an anti-austerity left-wing party nearly won the general election.
"In September and October we had returns of one billioneuros apiece, and there is talk of another 700 million euros in November,"a European official said.
"There is clearly a wave of deposit returns, mainlyinvolving money that people had taken out and put in strongboxes or bankdeposit boxes during the electoral campaign," he added.
To restore the flow of loans, Greece had to commit toanother 18 billion euros of savings by 2016 on top of cuts to pensions andsalaries over the last two years.
The government is currently debating in parliament a bill tobroaden the tax base and increase revenue by two billion euros next year.
But the ruling coalition of conservatives, socialists andmoderate leftists has already lost a sizeable part of its parliamentarymajority as it pushed through the tough reforms, just six months into its term.
The European Commission on Monday warned that "verylarge" implementation risks to Greece's fiscal overhaul remained.
"The key risks concern the overall policyimplementation, given that the coalition supporting the government appearsfragile and some components of the programme face political resistance, despitethe determination of the government," it said.
The IIF international bank lobby, which helped Greece pushforward its debt repayments earlier this year, has highlighted concerns causedby the Greekeconomy's rapid contraction that is only set to ease up next year.
"With real GDP likely to decline another 4-5 percentnext year after falling 6 percent this year, and further austerity testingsocial cohesion, risks to the EU-IMF program will remain substantial," theInstitute of International Finance said on Tuesday.
Hundreds of civil servants protested in Athens on Wednesdayagainst the new austerity measures as part of a 24-hour strike called by unionsthat paralysed public services and disrupted transport.
In a message to Greece's EU-IMF creditors that have demandedsacrifice by Greeks, a group of protesters held up rows of underpants on aclothes line that spelled out "You can take these too."
