ATHENS — Greece’s battered economy will start recovering in the last three months of 2011, the country’s development minister said Monday, as international rescue-loan inspectors began another fiscal checkup.
Michalis Chrysohoidis told The Associated Press in an interview that the troubled eurozone member had been helped by drastic cost-cutting and a pickup in exports.
“I believe that from the fourth quarter ... a gradual recovery will begin in the country, all these measures will start to produce results. And I believe Greece will enter a virtuous circle with growth and development,” Chrysohoidis said.
Greece was saved from bankruptcy in May by a C110 billion ($150 billion) package of rescue loans from other countries using the euro and the International Monetary Fund.
In return, the Socialist government imposed strict austerity measures aimed at slashing the budget deficit down to below the EU limit of 3 per cent of GDP by 2014, from a whopping 15.4 per cent in 2009.
The economy is forecast to contract 3 per cent in 2011 as a whole, before expanding at a projected 1.1 per cent rate in 2012.
Chrysohoidis said growth will be achieved through a mix of ongoing reforms, including tax breaks for new or expanding businesses to encourage investment, the absorption of already earmarked EU funds and the simplification of Greece’s notoriously complicated bureaucracy for starting new businesses.
“Our big concern is to not have a repetition of what happened in the previous decades. The fact that an economy developed and grew based on feet of clay, on consumption,” he said. “Our economy was based by 80 per cent on consumption and not development. We must reverse that.”
Exports have already seen a boost and account for nearly 9 per cent of GDP in 2010, the minister said, adding that authorities were aiming for an increase to 10 per cent of GDP by the end of this year. Food accounts for a quarter of current Greek exports, construction material for another quarter and a further 25 per cent for the export of industrial products such as chemicals and plastics, he said.
For instance, November saw a 40 per cent increase of exports compared to November 2009, he said.
Greece is receiving quarterly batches of the bailout loan money over three years — with each payment preceded by a fiscal inspection to gauge the Socialist government’s austerity program.
The delegation of inspectors, dubbed the troika, is currently reviewing progress in order to approve the next payout in March, worth C15 billion ($20.5 billion) — the second largest batch of loans under the program.
The March payment will be the fourth since Greece signed up to the program in May, bringing the total amount received by Greece so far to C53 billion ($72.2 billion).
Government officials insist Greece is already meeting conditions laid out during their previous visit in November, despite an ongoing wave of labour protests.
Public transport workers, pharmacists, state hospital doctors and lawyers are all planning strikes this week.
Also Monday, police said protesting textile workers staged sporadic highway blockades at the Greek-Bulgarian border and six farmers were arrested in the area also trying to lead a blockade.
Chrysohoidis, who met with the troika in the morning, said the inspectors were satisfied with progress so far.
“There is satisfaction on their part,” he said, adding that regardless of the bailout loans, the measures Greece was implementing were essential.
“The changes are necessary — perhaps they should have been done many years ago,” the minister said. “But whether the troika exists or not, the necessity to change the country is a given.”