Greece says it needs budget surplus, growth to return to bond markets

Fri Aug 9, 2013 7:46am EDT
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By Harry Papachristou and Renee Maltezou

ATHENS (Reuters) - Greece must achieve economic growth and a budget surplus excluding interest payments before it can return to bond markets and will meet both conditions next year, finance minister Yannis Stournaras said on Friday.

By then, Greeks will have endured a six-year recession that has shrunk the economy dramatically. Excluded from financial markets since 2010, Greece has been kept afloat and inside the euro zone only by a 240 billion euro EU/IMF bailout.

A returning to borrowing in markets could help Athens plug a financing shortfall currently estimated at about 10 billion euros in the 2014-2015 period.

"I have set two conditions for Greece to access (bond) markets. The first is a primary surplus and the second one is a return to growth," Stournaras told Greek private Mega TV.

Figures on Friday showing industrial production rose 0.4 percent June compared with the same month last year - the second monthly expansion this year - confirmed the economy may be crawling towards a recovery.

Petroleum products and pharmaceuticals drove a 4.2 percent jump in manufacturing production - the biggest manufacturing expansion since May 2008, just as Greece's recession began, according to central bank figures.

"This is undoubtedly a positive sign that the recession in industrial production may be bottoming out," said Platon Monokroussos, an Athens-based economist with Eurobank. "Yet we need to watch for more positive signs going forward to make sure that a recovery trend has been established."

The European Union and International Monetary Fund estimate the Greek economy will expand by 0.6 percent next year, after a crippling, austerity-fuelled contraction that has wiped out almost a quarter of gross domestic product since 2008.   Continued...

Ministers of Energy for Greece, Cyprus and Israel (L-R) Yannis Maniatis, Yiorgos Lakkotrypis and Silvan Shalom attend the signing of a memorandum of understanding in Nicosia, Cyprus Thursday August 8, 2013. REUTERS/Andreas Manolis.