Prime
Minister Tsipras said Greece would return to growth in the first half of 2016
The Wall
Street Journal
By NEKTARIA
STAMOULI , STELIOS BOURAS and VIKTORIA DENDRINOU
Updated
Oct. 5, 2015 3:55 p.m. ET
2 COMMENTS
ATHENS—Greek
Prime Minister Alexis Tsipras affirmed his commitment to the country’s new
bailout program and said Greece could return to capital markets within the next
two years.
In his
first speech to Parliament since winning September’s elections, the Greek
premier said his government would press ahead with its austerity plan, and
pledged to soften some of the policies demanded by international creditors.
“We are
fully aware that despite the positive aspects of the agreement, it also contains
tough points,” he said.
Mr. Tsipras
said the government would try to find “antidotes” to ease the burden of the
heavy tax increases and pension-spending cuts required under the bailout terms.
He promised to suspend a planned increase in the taxation of private schools, a
measure that would hit many middle-class families.
Eurozone
finance ministers meeting in Luxembourg on Monday agreed on a list of economic
overhauls Greece must implement to get its next slice of financial aid.
Athens must
complete two sets of economic and financial overhauls in the coming weeks to
unlock €3 billion ($3.36 billion) in bailout funds, which are to be released in
two steps as reforms are enacted.
Launching a
three-day parliamentary debate, Mr. Tsipras pledged to lead Greece out of its
debt crisis in the next four years and said the country would return to growth
in the first half of 2016.
According
to a draft budget, the economy this year will contract 2.3%, followed by a
further 1.3% in 2016. Unemployment is expected to inch higher next year to
25.8% from 25.4% in 2015. The figures are in line with forecasts included in
the country’s third bailout deal agreed upon in July.
The tax
hikes and spending cuts in that agreement mean that Greece is targeting a
primary budget deficit, excluding debt interest, of 0.25% of economic output
for this year before swinging to a primary surplus of 0.5% in 2016.
The
41-year-old left-wing leader, first elected in January, abruptly reversed
course on opposition to further austerity and agreed to a tough third bailout
deal for up to €86 billion ($96.14 billion), a move seen as necessary to avoid
a chaotic exit from the eurozone. He called snap elections in a successful bid
to jettison doubters in his party, securing a comfortable win and a mandate to
push through the deal. The Syriza leader renewed his coalition with the
right-wing Independent Greeks.
The premier
said his government’s top priorities will be a fast and successful conclusion
of the first review of the country’s bailout, to open the road for talks on
restructuring Greece’s debt, and the recapitalization of Greek banks.
Greeks have
been living with limits on bank withdrawals and other financial transactions
since late June.
“We are
aware that the successful conclusion of the first review is the key that will
open the door for the necessary debt restructuring,” Mr. Tsipras said.
The Greek
premier also set as his government’s priority to restore collective bargaining
in labor markets and tackle the issue of nonperforming bank loans.
He added
that he will change the management in banks that will need bailout funds for
their recapitalization.
The deal
foresees up to €25 billion ($27.96 billion) for the recapitalization of the
country’s banks. The exact amount needed to cover their capital shortfalls will
be determined in a review by the European Central Bank, which will include an
assessment of the balance sheets of the four largest Greek banks as well as stress
tests.
Mr. Tsipras
also repeated his pre-election pledge to tackle Greece’s decades-old problems
of corruption and political patronage, which helped to bring about the debt
crisis.
Write to
Nektaria Stamouli at nektaria.stamouli@wsj.com, Stelios Bouras at
stelios.bouras@wsj.com and Viktoria Dendrinou at viktoria.dendrinou@wsj.com
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