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Greece needs post-bailout watching despite big surplus, says Citigroup

Citigroup has joined a chorus of critics in warning that Greece will need decades of monitoring when three international bailouts of 326 billion euros ($398.82 billion) end in August, undercutting Prime Minister Alexis Tsipras’ claims of a “clean exit” after what would more than eight years of rescue packages and austerity.

That came after similar warnings from Eurogroup Working chief Thomas Wieser, an American-Austrian economist working for the European Union, who told Kathimerini while there hasn’t been any determination about post-bailout arrangements for Greece that he expects it will include debt relief but with more measures.

Tsipras has been hanging his hat on hopes Greece can return to the markets after in July, 2017 floating a test bond of 3-billion euros ($3.66) that sold quickly but at interest rates more than three times higher than the bailouts.

Wieser said that, “If there should be further debt relief after the end of the program then it’s only logical there will be some kind of additional agreements.”

Greece’s post-bailout status was raised in a Brussels sesion of the Eurogroup (EWG),an informal body where the ministers of the euro area member states discuss matters relating to their shared responsibilities related to the euro, used by 19 of the 28 countries in the European Union.

He said Greece will continue to remain under creditors’ supervision for many years to come, with or without an agreement for further debt relief with reports the oversight could continue until 2060.

Citigroup pointed to Wieser’s warning as one reason it also issued a caution. Bank of Greece Governor Yannis Stournaras said a cautionary program may be needed and former finance minister and previous PASOK Socialist leader Evangelos Venizelos also said there won’t be a clean break from the bailouts.

Tsipras has also agreed, in more breaking of anti-austerity promises, to automatic spending cuts if fiscal targets aren’t met.

Wieser told Kathimerini that despite the worries, an avalanche of tax hikes, new taxes, pension cuts, political volatility and SYRIZA’s plunge in the polls that foreign investors still are eying Greece even though other analysts said foreign businesses are shying away and hard core elements in the Leftists don’t want them.

Citigroup’s red flag came even though the government claimed a primary surplus of nearly 1.97 billion euros ($2.41 billion) in 2017, down from a surplus of 2.778 billion euros ($3.4 billion) in 2016 but far higher than an 877-million-euro ($1.072 billion) target, the Finance Ministry said.

That doesn’t include interest on debt and the bailouts, the cost of running cities and towns, state enterprises, social security, some military costs and as critics said the government has essentially cooked the books by holding back payments to vendors, those owed money by the state, and delayed tax refunds so it could present a rosier picture. source

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