By Tasos Dasopoulos
Countries with very high debt should maintain a prudent fiscal policy, reiterated the head of the European Stability Mechanism (ESM), Klaus Regling, who otherwise had only good words to say about Greece’s progress.
Speaking at the Economist conference and looking back on the 10 years he has been in contact with the Greek economy, he emphasized that the Greek economy is now much more resilient than it was before the crisis after the adoption of a number of reforms that continued over the years of the pandemic, but also now, in the period of high inflation.
“The change is huge. Today the debt is sustainable, the fiscal problems that led to the crisis have been addressed and the Greek economy continues to grow,” said Mr. Regling, noting that after all this, Greece is now exiting the regime of enhanced supervision that is a big step towards normality.
On the debt in particular, he said its sustainability is due to more than half being owned by the ESM and EFSF with AAA-rated interest rates and lower financing needs than many other EU countries. but also a repayment period of up to 30 years. However, he emphasized that despite the large number of reforms that have already been completed, there are also some last ones that should be completed in order to strengthen the Greek economy even more.
The head of the ESM appeared optimistic about the course of the E.U. rejecting the rumor that Europe is going into recession due to the energy crisis and the effects of the war in Ukraine. He pointed out that Europe is now more protected than a few years ago, deposit rates are high and unemployment is at historic lows. The banking system – he said – has overcome the problems of the past and is now strong and he added: “The point is that all countries, and especially those with a higher percentage of debt, maintain a prudent fiscal policy, said Mr. Regling referring to Europe in general but also in Greece.
He also emphasized that in the period of rising interest rates and high inflation, Europe should make appropriate use of the Recovery and Resilience Fund money from which Greece is particularly favored.