Greece’s Economy Is on Road to Recovery: France’s Noyer
Writer CNBC.com Asia
Greece's economy is mired in recession but there are reasons to be upbeat and the debt-laden nation will be able to rebound strongly as it works its way through reforms, European Central Bank governing council member Christian Noyer told CNBC.
Noyer pointed to a pick-up in Greek exports as a sign that the economy is finally on the mend. The rate of growth of Greek exports is now among the highest in the euro zone after costs and wages have been cut significantly, he told CNBC Asia's Kaori Enjoji in an exclusive interview.
His comments follow remarks on Monday by Greece's central bank, which said Greece's economy can recover sooner-than-expected if structural reforms and financial measures are implemented.
Greece now needs to convince investors that it will press ahead with key economic reforms while reducing its ballooning debt, said Noyer, who is also France's central bank governor.
"Now, what remains to be done is effective improvement in the administration and enabling economic activities to start and develop in a less bureaucratic fashion," he said. "That is really the core issue in the (debt) program and many reasons to be confident that it (the economy) can surge."
Greece, which is expected to enter its sixth year of recession in 2013, recently gave investors a reason to cheer with news that exports rose 11 percent in the first eight months of the year. In September, exports grew 9.7 percent from August, the biggest jump of all the countries in the euro currency bloc.
Athens has also promised to implement reforms such as spending cuts, the privatization of state enterprises and slashing red tape to make the economy more nimble and efficient, in exchange for aid from its international lenders.
Greece said on Monday it would buy back bonds through an auction as part of its plans to cut its debt, allowing it to assess the level of demand before setting a final price for the deal.
The bond buy-back is key to the efforts of foreign lenders to put Greece's debt back on sustainable footing, and its success will pave the way for Athens to get the latest tranche of aid from its lenders to avoid bankruptcy.
Many current bondholders have bought Greek bonds "at a huge discount" from other creditors, Noyer said, and the market price now will be a fair deal to them.
"They should also take into account that if they don't come, there is no assurance that the prices will not go down after the period has expired," Noyer added, referring to the December 13 deadline by which Greece must conduct the deal.
Greece will receive more than 30 billion euros ($39 billion) in bailout payments from the euro zone and the International Monetary Fund if the debt buy-back succeeds, the lenders said last week.
"(It's) likely to have strong interest to come," Noyer said, referring to the debt buy-back. "We will see what happens. But I tend to be rather confident that they should attract a lot of interest."
Athens said it would spend 10 billion euros ($13 billion) to buy back bonds at a price range that topped market expectations, boosting hopes it can reduce its ballooning debt and unlock long-delayed aid.
This sparked a rally in Greek bonds on Monday.
Greece is proportionately the currency area's most heavily indebted country, with debt exceeding 100 percent of gross domestic product. Its economy has shrunk by nearly 25 percent in five years.