The Greek government looks set to return to bond markets this week, after a four-year absence - its last issue for seven-year bonds was in the first quarter of 2010, a couple of months ahead of the bailout that locked it out of markets.
But earlier this year, finance minister Yannis Stournaras laid out a set of conditions which haven’t yet been fulfilled.
Greece has recorded a primary surplus (which excludes the country’s large debt interest payments), but it certainly hasn’t recorded growth.
The 3.7 per cent GDP contraction in 2013 may be better than Greece had in previous years, but it is still a considerable recession by any objective standard.
Greek GDP is nearly back to 1990s levels when measured in constant prices, about a quarter smaller than it was at its peak in the first quarter of 2008.
The scale of the collapse in output is similar to the great depression in the US - over a quarter of the workforce is unemployed, and more than half of young people are out of work and looking. In 2012 constant prices, the OECD indicates that average wages dropped by about 18 per cent (for those still able to find work).
For the Greek people, the effects are jarring - the crisis exacerbated the country’s demographic issues, with fewer live births in 2012 than in any year since 1955. A further study found a 10-fold increase in HIV incidence for intravenous drug users between 2009 and 2010, alongside mental health funding being cut by more than half in one year alone.
The European Central Bank’s officials insist that they don’t expect deflation for the Eurozone, but it’s already a reality for Greece, and shows little sign of abating. Falling prices make it even harder for the Greek government to service its mountain of debts.
There’s no doubt that the Greek position has improved from the height of the euro crisis, and that it will eventually have to start issuing bonds again as support from the Troika ends.
The government’s 10 year bond yields have plunged since Mario Draghi’s ‘whatever it takes’ speech, from above 30 per cent in much of 2013 to just below six per cent today, levels that Spain and Italy had less than two years ago.
The Greek government isn’t the only Eurozone country looking to speed up its return to normalcy. The Irish state exited its bailout programme without a precautionary line of credit, and Portugal looks set to do the same - but the cost to Greece of returning to debt markets early is very easy to see.
Yields are still expected to be quite high, and it’s not at all clear that the unquantifiable reassurance to markets is worth the extra cost to Greek taxpayers.