Alexis Tsipras says Greece will not need credit line when it exits bailout

Greek prime minister Alexis Tsipras has insisted his country will not need a precautionary credit line when it exists its bailout, even as turmoil in financial markets prompted his debt office to delay a bond sale.

Greece plans to raise as much as €19 billion through three bond sales in the first half of this year to build a cash buffer ahead of the country’s plan to regain its economic sovereignty in August after a third bailout since 2010 expires. However, it decided against selling a seven-year bond on Tuesday as investors weigh this week’s market jitters.

"I don't believe that [the turbulence] will be permanent," Mr Tsipras said in response to a question from The Irish Times at a briefing for journalists from the euro zone on Wednesday. "We are sure that we will do [the bond sale ], maybe next week or after a month."

Greece, which has received €266 billion of aid to date a result of three international bailouts since 2010, is preparing to exit its third programme in August, as the country has returned to growth and as the market interest rate, or yield, on its 10-year government bonds have fallen to pre-crisis levels.

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Having raised an initial €3 billion through a bond sale last year, the first since 2014, Mr Tsipras has set his sights on a clean bailout exit, without a backstop or precautionary credit line.

Economy expanded 2.5%

The European Commission said on Wednesday that the Greek economy expanded by an estimated 1.6 per cent in 2017, and forecast that it will grow by 2.5 per cent for both this year and next, driven by net exports against the backdrop of an improving European outlook.

“Last year was the year that Greece came back,” said Mr Tsipras.

“Sustained improvement in the labour market and in consumer sentiment is set to fuel private consumption growth,” the commission said. “The business climate in Greece is also expected to improve further.”

While the unemployment rate had fallen to 20.7 per cent in October from a peak of 27.5 per cent in 2013, it remains the highest in Europe.

The yield on Greece’s 10-year government bonds – a benchmark for market appetite for the country’s debt – has fallen to about 3.7 per cent, a level not seen since 2005, from an all-time high of 48.6 per cent in March 2012.

Still, with the country’s borrowings standing at 180 per cent of the size of the economy – compared to about 70 per cent in Ireland – the International Monetary Fund and Greece’s EU bailout partners are at odds over how sustainable its debt is over the long term.

The IMF has consistently called on the EU to provide debt relief for Greece, either in the form of a “haircut” on debt or further extensions on its debt repayments.

While euro-zone finance ministers are open to debt relief, initial discussions are currently mainly centred around ideas such as giving Greece further repayment extensions if future economic growth falls short of expectations and subject to future governments continuing to implement economic and fiscal reforms.