\u2018Plausible\u2019 that Greece will exit bailout programme this year \u2013 HSBC.Greece may be able to exit the bailout programme established by international authorities as soon as this year, HSBC has said, in a sign of just how far the eurozone has come since the depths of the debt crisis in 2011.<\/p>\n
The country last year regained access to capital markets, its economy is looking less dreary, and it will have enough cash reserves in August of this year to finance itself for the next \u201cyear or so\u201d, said Fabio Balboni, European economist at HSBC.<\/p>\n
\u201cFor a number of years, there has been concern about a possible Greek exit from the eurozone. But, having regained access to markets last year, in 2018 Greece might exit its bailout programme instead, after eight long years, and nine finance ministers,\u201d he said.<\/p>\n
However, it is less clear whether Greece will be able to make a clean break, one without a follow-up scheme.<\/p>\n
\u201cA \u2018clean\u2019 exit might be feasible, at least for a period. But a precautionary programme, or at least \u2018enhanced\u2019 post-programme surveillance, might be needed to ensure Greek bonds remain eligible in the ECB refinancing operations,\u201d said Mr Balboni.<\/p>\n
If Greece is successful in moving past the string of bailouts it has received over the past eight years from the EU and International Monetary Fund, it would mark the latest sign of progress for one of the countries that was badly maimed during the debt crisis.<\/p>\n
Greece\u2019s jobless rate was 26.5 per cent in 2014, with youth jobless reaching 52.4 per cent that year. In October of last year, Greece\u2019s overall unemployment had eased to a still-elevated 20.6 per cent, data from Eurostat show.<\/p>\n
Meanwhile, the economy grew sequentially in the third quarter 2017 for the third quarter in a row, the longest such streak since 2006, according to HSBC\u2019s tabulations.<\/p>\n
Economic and political improvements allowed Greece to re-enter international debt markets last year. It sold a five-year bond in July, and launched a debt exchange in November.<\/p>\n
There has also been a vast improvement in the secondary market: the yield on Greece\u2019s benchmark 10-year bond was 3.9 per cent on Thursday. It had surged close to 40 per cent in 2012, according to Reuters data. Trading activity is muted in Greek sovereign bonds, meaning that the moves may be exacerbated relative to broader investor sentiment.<\/p>\n
Mr Balboni noted that Greece is \u201cstill far from an investment grade [and] the country remains excluded from the [European Central Bank’s] QE programme.\u201d He reckons inclusion into the bond buying programme is \u201csome way off\u201d, which could limit a further reduction in bond yields.<\/p>\n
Much hinges on the eurozone\u2019s willingness to provide Greece with debt relief. The bloc owns 80 per cent of Greece\u2019s debt, according to HSBC. Without \u201csubstantial\u201d relief, \u201cGreece will fail to meet the IMF\u2019s debt sustainability requirement,\u201d said Mr Balboni.<\/p>\n
\u201cFurthermore, under some reasonable assumptions in terms of growth, and with the primary surplus targets agreed at last July\u2019s Eurogroup meeting, Greece\u2019s debt would not stabilise, as cheap eurozone loans get replaced by more expensive bonds,\u201d he added.<\/p>\n