The Greek government believes a deal with international creditors on its current debt pile is just around the corner, potentially paving the way for the embattled euro zone economy to finally stand on its own.
“I think we will achieve a very, very good result very soon,” Dimitris Tzanakopoulo, the Greek minister of state who is also the Greek government spokesperson, told CNBC in Athens on Monday.
Its third bailout program, a 86 billion euro aid package ($102 billion), is due to finish in August of next year — meaning that Greece will not receive any more disbursements from its creditors after that date and will have, in principle, to finance itself in the public markets.
In order to guarantee that market access won’t be an issue after August, Greece hopes to get an agreement that will restructure its pile of debt before the summer — and thus, prove once more to investors that they can trust Greece after nearly a decade of financial crisis.
“We will have an agreement before the end of the program. This is very important for us in order to be able to refinance our debt without official sector support, I think this is a precondition in order for us to do that,” Tzanakopoulo told CNBC.
The issue is highly contentions in Europe. Germany and institutions such as the European Stability Mechanism, which is a fund that helps euro zone countries that need to borrow, argue that Greek debt is sustainable in the coming years and it is therefore not a priority for creditors.
“Europe, in the last months, has been quite destabilized not only because of Brexit, but Germany has no government and this is of course a concern,” Tzanakopoulo added, noting that Greece needs a German government in order to continue progressing with all the bailout-related questions.
Earlier on Monday, Dimitris Papadimitriou, Greece’s minister of economy, told CNBC that European leaders have recognized that something has to happen with the Greek debt.
“Even the outgoing (German) Finance Minister (Wolfgang) Schaeuble indicated that, in fact, Greece has done what it was supposed to do and more, and therefore we have to deal with the Greek debt,” Papadimitriou said.
Though the specific negotiations on how to restructure the Greek debt have yet to commence, Tzanakopoulo believes they have found an “algorithm.”
“We have this cap of 15 percent that our gross financing needs shouldn’t go over … So the medium-term measures that we need to take have to be thus that we won’t need more than 15 percent of our GDP (gross domestic product) in order to refinance our debt. I think we have a locked algorithm there,” he said.
European creditors and the International Monetary Fund believe that gross financing needs should ideally remain below 15 percent of GDP in order for an economy to be stable. However, they have different forecasts when it comes to the pile of debt owned by Greece over the coming years, which makes the discussion on what measures Greece needs to be able to stand on its own feet a tricky one.
Greece believes there will be a deal on its debt issues 'very soon'