Samaras ‘Fully Comfortable’ Seeking Early Exit for Greece

By Jonathan Stearns

Photographer: Konstantinos Tsakalidis/Bloomberg

Antonis Samaras, Greece's Prime Minister.

Prime Minister Antonis Samaras said he aims to sever the international lifeline that has kept Greece afloat since 2010 by forgoing disbursements of emergency loans scheduled over the next two years.
“We feel fully comfortable” that Greece can cover its financing needs from the bond markets in the coming years, Samaras, 63, said in an interview in Milan yesterday after a European Union summit.
An improvement in public finances and low interest rates have emboldened Samaras, who said the Greek parliament will discuss the end of aid from
the euro area and International Monetary Fund, which have granted the country 240 billion euros ($306 billion) in bailout loans, in a confidence-vote debate scheduled to run through tomorrow.
Greek bonds are the best-performing securities in the Bloomberg indexes this year, having earned 20 percent through yesterday. The yield on 10-year debt fell as low 5.52 percent on Sept. 8, the lowest since early 2010. Even after a sell off in the past month, that compares to a record high of 44 percent in March 2012, on the eve of the world’s biggest-ever debt restructuring.
The yield declined eight basis points to 6.61 percent as of 10:15 a.m. in Athens today.
Samaras’s confidence contrasts with fellow euro-area and IMF officials, who insist Greece should retain access to bailout funds next year. The prevailing view among those officials is that Greece’s market access remains fragile, according to two people directly involved in the negotiations.

Syriza Lead

European Central Bank President Mario Draghi weighed into the debate last week, saying the country needs to remain in some kind of program for Greek banks’ junk-rated asset-backed securities to be eligible for the ECB’s ABS purchase program.
The bailout loans came with belt-tightening conditions that exacerbated a six-year Greek recession, left more than a quarter of the workforce jobless and triggered a social backlash. Aid next year would also come with strings attached.
Samaras, head of the New Democracy party that has governed in a coalition with the Socialist Pasok since mid-2012, is seeking to avoid early elections that polls indicate would be won by the main opposition Syriza party, which has made political capital from opposing the conditions of the rescue program. Greece’s next general election is due in 2016.

No Divorce

Ending aid payouts wouldn’t mean “a divorce” with Greece’s public creditors, Samaras, a Harvard-educated economist, said in the Milan interview.
“We want to do it properly,” he said. Greece is prepared to negotiate an appropriate oversight role of its economy for the euro area and IMF, he added.
Greece returned to bond markets in April after a four-year exile and a draft budget submitted to parliament this week foresees sales of 7-year and 10-year notes in the coming months. The government also targets a near-balanced budget next year, when the IMF projects that the Greek economy will grow faster than most developed nations.
Asked how confident he is that Greece can survive without support, Samaras said: “absolutely.”