Hollande to Play Up Euro Recovery Prospects in First Greek Visit

By Mark Deen - Feb 19, 2013 1:01 AM GMT+0200

Bloomberg

Francois Hollande plans to emphasize the prospects of a return to growth in the first visit of a French president to Athens since Greece triggered the European sovereign debt crisis more than three years ago.

Hollande, a Socialist who won last May’s election emphasizing growth over austerity, will repeat his commitment to keeping Greece in the 17-nation euro area and press Greek Prime Minister Antonis Samaras to forge ahead on the revamp of his nation’s economy, said a French government official who briefed reporters.

The visit, which kicks off with Samaras greeting Hollande with military honors at 11:30 a.m. in Athens, is likely to contrast with that of German Chancellor Angela Merkel in October for the absence of protests against austerity imposed in return for European bailouts. As the region’s two largest economies, Germany and France are the two biggest contributors to the two bailout packages for Greece since April 2010.

“Hollande is likely to be better received than Merkel since France has been less vocal about the need for strict austerity despite contributing nearly much money as Germany,” said Michael Michaelides, a rates strategist at Royal of Scotland Group Plc in London.

Merkel met Samaras Oct. 9 in Athens as protesters massed outside the Parliament building in a capital in virtual lockdown. The first general strike of the year in Greece is set for tomorrow. Hollande, 58, is scheduled to leave tonight.

Since then, euro governments have agreed to release 49 billion euros ($66 bilion) through March, unblocking emergency aid that was frozen since June.

Shrinking Economy

Greece’s economy, which has lost a fifth of its output since 2008, is in the sixth year of a recession after pensions and wages were cut and taxes raised to avert financial collapse. A turnaround could appear on a monthly or quarterly basis toward the end of this year, according to Finance Minister Yannis Stournaras.

“The most important driver is the reduction of the fear that Greece will leave the euro,” Stournaras told Bloomberg Television in an interview in Athens Feb 6. “This is the catalyst. Now most people believe that Greece will stay in the euro so people are bringing back their money from mattresses, from abroad to their bank accounts.”

The International Monetary Fund predicts growth of 0.6 percent in 2014 after a 4.2 percent contraction this year.

In November, Stournaras secured two extra years until 2016 from euro-area peers to meet European Union and IMF budget- reduction targets. That came after Samaras’s three-party coalition secured parliamentary approval for 13.5 billion euros of budget cuts demanded by international lenders in return for funds that would keep the country solvent and in the euro area.

Nicolas Sarkozy’s visit in June 2008 was the last time a French president was in Athens.

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net