Friday, June 27, 2014

Renewed Optimism About Greece Is Well Overdone

by Desmond Lachman

Real Clear Markets

June 27, 2014

Judging by the renewed optimism in the Greek sovereign debt market, one could be forgiven for thinking that the worst of the Greek economic crisis was behind us. After all, Greek sovereign bond yields have now declined toward levels last seen immediately before the onset of the European sovereign crisis some five years ago. However, it would be a grave mistake for Greek policymakers to allow currently buoyant market sentiment to blind them to Greece's still very large economic and political challenges. If left untreated, the country's poor fundamentals threaten to undermine Greece's prospects for digging itself out of its present depressed economic situation when global liquidity conditions become less favorable than they are today.

A popular adage on Wall Street is that when the winds are strong even turkeys fly. By this it is meant that when liquidity is ample, investors do not discriminate between different credits but rather invest blindly in anything that offers an attractive yield. If ever global liquidity conditions have been highly favorable, it has to have been in the past year and a half. For not only was the Federal Reserve expanding its balance sheet at an unprecedented rate but so too was the Bank of Japan in an effort to rid Japan of deflation.

In the context of ample global liquidity, Europe has now regained the market's favor despite the threat that a move to deflation poses towards the European economy and despite dismal European parliamentary election results, which suggested a crumbling of the European political center. As a result, the Italian government today can borrow at rates as low as those paid by the U.S. government despite the fact that Italy's debt to GDP ratio now exceeds 135 percent. Similarly, the French government now borrows at rates very similar to those of the German government despite the clearest of signs of domestic political fragmentation and despite the country's many structural economic difficulties. Meanwhile, countries like Cyprus and Portugal, which were not too long ago viewed as countries with unsustainable debt dynamics, have now been able to re-access the global capital market.


Thursday, June 26, 2014

Greek Bonds Beat Lottery as Funds Surge on Smashed Glass

June 26, 2014

The woman who died in a burning Athens bank still smiles at Giorgos Mastorakos on his way to the delicatessen he owns around the corner.

The wreaths and tributes no longer cascade onto the road to mark the spot where she and her two colleagues were killed in violence in May 2010 after the country’s unsustainable debts and ensuing financial decline resulted in the first depression since World War II. At the makeshift memorial that fewer people visit on the anniversary of the deaths, the photo of the woman’s face is framed by an anarchist sign and withering bouquets.

Mastorakos, 64, and his employees helped those who escaped the burning building. “And that’s when the questions began: Did so-and-so get out? Have you seen that person?” he said.

The anger against austerity, reflected in the broken windows of hundreds of Athens storefronts, led to political turmoil in 2011, the world’s biggest debt restructuring the following year and chaos as elections forced Greeks to choose between the euro and the drachma. Now, halfway through his term, Prime Minister Antonis Samaras sees recovery and redemption after Greece came to the brink of bankruptcy and sparked a contagion that engulfed Ireland and Portugal.

The economy will expand this year after the worst downturn in peacetime, the highest unemployment in the region has peaked and investors are buyers of Greek bonds again. The yield on benchmark 10-year government debt is 5.79 percent, down from the high of 44.2 percent in March 2012 -- a return better than most winning lottery tickets.


Wednesday, June 25, 2014

Lessons from the 2012 Greek debt restructuring

by Miranda Xafa


June 25, 2014

The 2012 Greek debt restructuring was the largest one in the history of sovereign defaults. This column discusses the lessons from this historically unprecedented episode. Delaying the restructuring implied that externally held debt remained higher than it would have been otherwise. Supportive crisis management is necessary for smooth restructuring to take place in a currency union.


Τι βάθυνε την κρίση και τι καθυστερεί την ανάπτυξη

Το Βήμα
25 Ιουνίου 2014

Η ομηρία των ελληνικών πολιτικών ελίτ στο πελατειακό σύστημα που οι ίδιες εξέθρεψαν τις τελευταίες δεκαετίες, η εμμονή στην εσωτερική υποτίμηση και στην περικοπή του κόστους εργασίας και η καθυστέρηση στην υλοποίηση των διαρθρωτικών μεταρρυθμίσεων ήταν τα τρία βασικά στοιχεία που βάθυναν την κρίση στην Ελλάδα και καθυστερούν την ανάκαμψή της. Πλέον, πρέπει να δοθεί έμφαση στην έρευνα, στην ανάπτυξη και στην τεχνολογία ώστε η χώρα να σταθεί ανταγωνιστικά στο διεθνή οικονομικό στίβο.

Αυτό συμπεραίνουν στο βιβλίο τους με τίτλο Greece: From Exit to Recovery? («Ελλάδα: Από την έξοδο στην ανάκαμψη;») οι Μιχάλης Πελαγίδης, καθηγητής Οικονομικών στο πανεπιστήμιο Πειραιά και Μιχάλης Μητσόπουλος, οικονομολόγος στον Σύνδεσμο Επιχειρήσεων και Βιομηχανιών, το οποίο παρουσιάστηκε την Τρίτη σε εκδήλωση που οργάνωσαν το Ίδρυμα «Σταύρος Νιάρχος» που χρηματοδότησε τη μελέτη, σε συνεργασία με το γνωστό αμερικανικό ινστιτούτο Brookings, στο πλαίσιο του European Growth Project.

Το παρών στην παρουσίαση έδωσε ο γνωστός και στην Ελλάδα τούρκος οικονομολόγος Κεμάλ Ντερβίς, σήμερα αντιπρόεδρος του Brookings και θεωρούμενος ως ο αρχιτέκτονας της εξόδου της Τουρκίας από τη δική της βαθιά οικονομική κρίση στις αρχές της δεκαετίας του 2000, καθώς και ο Χοσέπ Μπορέλ, ισπανός σοσιαλιστής πολιτικός, πρώην πρόεδρος του Ευρωπαϊκού Κοινοβουλίου (2004 – 2007).


Δες επίσης εδώ και εδώ

Saturday, June 21, 2014

Οι Ρίζες του Κακού

του Αριστείδη Χατζή

Τα Νέα

21 Ιουνίου 2014

Στα μέσα του 14ου αιώνα η Ευρώπη έχασε το ένα τρίτο του πληθυσμού της από μια επιδημία πανώλης (Μαύρος Θάνατος) που διαδόθηκε μέσα σε λίγα χρόνια σε ολόκληρη την ήπειρο, αλλά έπληξε κυρίως την Ιταλία και τη Γαλλία. Υπάρχουν διάφορες θεωρίες σχετικά με την προέλευση της επιδημίας, αλλά καμία δεν έχει επιβεβαιωθεί πλήρως. Όμως εκείνη την εποχή μια εξήγηση, ιδιαίτερα δημοφιλής, απέδιδε την ευθύνη σε εξιλαστήρια θύματα: τους ξένους, τους τσιγγάνους, τους ζητιάνους αλλά κυρίως τους Εβραίους. Οι τελευταίοι γρήγορα ξεχώρισαν ως οι βασικοί υπεύθυνοι. Είχαν, υποτίθεται, δηλητηριάσει τα πηγάδια από τα οποία έπιναν οι Χριστιανοί. Το ότι η ασθένεια θέριζε και τους πληθυσμούς εβραϊκής καταγωγής δεν προβλημάτιζε ιδιαίτερα τους μισαλλόδοξους που ξεκίνησαν διωγμούς σε ολόκληρη την Ευρώπη αλλά κυρίως σε γερμανόφωνες περιοχές. Σε πολλές από αυτές τις περιοχές εξοντώθηκε ολοκληρωτικά ο εβραϊκός πληθυσμός ή εκδιώχθηκε. Όλα αυτά 600 χρόνια πριν από την άνοδο των εθνικοσιαλιστών στην εξουσία και το Ολοκαύτωμα.

Το ενδιαφέρον και ταυτόχρονα τρομακτικό, όμως, είναι ότι στις περιοχές όπου οι Εβραίοι υπέστησαν, στη διάρκεια της μεσαιωνικής επιδημίας, τους σκληρότερους διωγμούς υπήρχαν υψηλότερα ποσοστά αντισημιτισμού κατά τη διάρκεια του μεσοπολέμου. Στις περιοχές αυτές, μία δεκαετία πριν από την άνοδο των Ναζί στην εξουσία, καταγράφηκαν εξαπλάσιες επιθέσεις κατά Εβραίων, ενώ στις εκλογές του 1928 οι Ναζί έλαβαν ποσοστά κατά 50% υψηλότερα απ’ ό,τι στην υπόλοιπη Γερμανία. Στις ίδιες περιοχές περισσότεροι κάτοικοι διάβαζαν εθνικοσοσιαλιστικά έντυπα και συμμετείχαν με πολύ μεγαλύτερους αριθμούς και φανατισμό στα πογκρόμ της Νύχτας των Κρυστάλλων και στις απελάσεις των Εβραίων.

Σε ποιες περιοχές της Γερμανίας οι διωγμοί είχαν μικρότερη ένταση και η ανοχή έναντι των Εβραίων ήταν μεγαλύτερη; Στις πόλεις όπου στο Μεσαίωνα αλλά και στο Μεσοπόλεμο η βασική πηγή του εισοδήματος ήταν το εμπόριο - και μάλιστα το υπερατλαντικό - και στις οποίες διέμεναν πολλοί μετανάστες, εσωτερικοί και εξωτερικοί (κυρίως οι πόλεις που μετείχαν στη Χανσεατική Ένωση).

Τα παραπάνω πολύ ενδιαφέροντα πορίσματα προέρχονται από έρευνα δύο οικονομολόγων (Nico Voigtländer και Hans-Joachim Voth) που δημοσιεύθηκε το 2012 σε ένα από τα σημαντικότερα επιστημονικά περιοδικά των οικονομικών. Οι συγγραφείς μελέτησαν κυρίως τη Γερμανία, αλλά επισήμαναν την ανθεκτικότητα του αντισημιτισμού σε χώρες όπως η Ισπανία και η Αγγλία, παρά το γεγονός πως οι χώρες αυτές είχαν εκδιώξει τους εβραϊκούς πληθυσμούς τους και οι κάτοικοί τους για αιώνες δεν είχαν καμία επαφή με Εβραίους.

Αναρωτιέμαι σε τι συμπεράσματα θα κατέληγαν ανάλογες έρευνες για τον αντισημιτισμό των Ελλήνων. Θυμίζω αυτό που έγραψα στο προηγούμενο άρθρο μου: η Ελλάδα έχει τα υψηλότερα ποσοστά αντισημιτισμού στην Ευρώπη, από τα υψηλότερα στον κόσμο, παρόμοια με εκείνα που συναντώνται στις χώρες της Μέσης Ανατολής.

Όσοι λοιπόν αναζητούν τρόπους αντιμετώπισης της Χρυσής Αυγής, ενός γνήσιου νεοναζιστικού κόμματος, ας λάβουν όλα τα παραπάνω υπόψη. Εάν περιμένουν εύκολες λύσεις και γρήγορα αποτελέσματα, θα αποτύχουν παταγωδώς. Εάν νομίζουν ότι η Χρυσή Αυγή αντιμετωπίζεται με εκπτώσεις στο Κράτος Δικαίου και με νομικούς ακροβατισμούς θα συνεχίζουν να πέφτουν από τα σύννεφα. Εάν θεωρούν ότι η φιλελεύθερη δημοκρατία πρέπει να γίνει λιγότερο φιλελεύθερη για να αντιμετωπίσει τους εχθρούς της, τότε σύντομα θα διαπιστώσουν ότι επέλεξαν να παίξουν στο γήπεδο του αντιπάλου.

Η Χρυσή Αυγή οφείλει τη μεγάλη επιτυχία της σε δύο αιτίες: μία συγκυριακή, την απονομιμοποίηση του πολιτικού συστήματος και μία δομική, την κυρίαρχη εθνική μας ιδεολογία.

Αυτή η ιδεολογία είναι βαθιά αντιδραστική: ανορθολογισμός, αντιδιαφωτισμός, αντιδυτικισμός, μισαλλοδοξία, ξενοφοβία, εθνικισμός, ρατσισμός, σχετικοποίηση της βίας, απέχθεια και φόβος απέναντι στην ανοικτή κοινωνία, την ελεύθερη αγορά, τον εκσυγχρονισμό και τις μεταρρυθμίσεις, τεχνοφοβία, πατερναλισμός, ηθικισμός και συνωμοσιολογία. Αυτή η εθνική ιδεολογία αναπαράγεται από το εκπαιδευτικό σύστημα και έχει υιοθετηθεί επιλεκτικά από όλα τα πολιτικά κόμματα, δεξιά και αριστερά.

Η Χρυσή Αυγή έχει απλά υιοθετήσει όλο το πακέτο χωρίς επιφυλάξεις. Έτσι οι εκλεκτικές συγγένειές της με ολόκληρο το πολιτικό φάσμα είναι παραπάνω από ορατές, όπως και η αμηχανία που προκαλούν.

Αν με ρωτήσετε λοιπόν ποιος είναι ο τρόπος αντιμετώπισης της Χρυσής Αυγής, θα σας απαντήσω πως δεν είναι τίποτα λιγότερο από την καθολική απόρριψη της κυρίαρχης εθνικής μας ιδεολογίας.

* Ο Αριστείδης Χατζής είναι αναπληρωτής καθηγητής Φιλοσοφίας Δικαίου και Θεωρίας Θεσμών στο Πανεπιστήμιο Αθηνών.

Εδώ θα βρείτε το άρθρο (όπως δημοσιεύθηκε στα Νέα)

Εδώ θα βρείτε το άρθρο στην ιστοσελίδα των Νέων

Εδώ θα βρείτε το άρθρο των Nico Voigtländer & Hans-Joachim Voth, "Persecution Perpetuated: The Medieval Origins of Anti-Semitic Violence in Nazi Germany", Quarterly Journal of Economics 127: 1339-1392 (2012). Μπορείτε όμως να διαβάσετε μία περίληψη του άρθρου εδώ, ενώ εδώ μπορείτε να διαβάσετε ένα άλλο, πολύ ενδιαφέρον, κείμενο των ίδιων συγγραφέρων ("Hatred transformed: How Germans changed their minds about Jews, 1890-2006")

The Black Death and the Jews 1348-1349

Εδώ θα βρείτε το προηγούμενο άρθρο μου στα Νέα με θέμα τη Χρυσή Αυγή και τίτλο "Ενδεχόμενος Δόλος"

Εδώ θα βρείτε ένα παλαιότερο άρθρο μου με τίτλο "Γράμμα προς ένα νέο οπαδό της Χρυσής Αυγής"

Εδώ θα βρείτε ένα ακόμα άρθρο μου για το Ναζισμό ("Οι Ζωές των Ανθρώπων")

Εδώ θα βρείτε ένα άρθρο που απαντά στο ερώτημα αν θα πρέπει να προστατεύεται η ελευθερία του λόγου και της έκφρασης των νεοναζί.

Εδώ θα βρείτε το Index of Antisemitism του ADL (για την Ελλάδα εδώ)

Το κάψιμο των Εβραίων όπως απεικονίζεται στα Χρονικά της Νυρεμβέργης (1493) του Hartmann Schedel

Thursday, June 19, 2014

Spending Spree: Anger with Greek Shipowners on the Rise

by Manfred Ertel


June 19, 2014

The Greek economy continues to suffer, but the country's shipowners are spending as though there were no crisis. Once popular, Greece's shipping companies are now widely reviled.

There was a time when Greece's shipowners adorned the covers of gossip magazines and ran football clubs, secure in the affection of millions of fans. But these days, men like Theodoros Veniamis, one of the richest shippers in the country, need personal protection. Many don't leave home without it.

On the list of Greeks hated by their countrymen, shipowners have almost reached the top; only politicians are more reviled. They are threatened by radical leftist groups and even physically attacked. There have also been attempted kidnappings. In at least one case, a family of a shipowner paid millions in ransom.

Shipping magnates in Greece are considered greedy and unscrupulous. According to international analyses, at least €140 billion of shipping industry money has gone untaxed since 2002, a sum that would reduce the critically indebted country's financial obligations by almost half. In Switzerland alone, there is thought to be up to €60 billion in Greek funds, mostly belonging to shipping companies. They were partly accumulated legally, thanks to a web of special regulations allowing tax exemptions for ship owners, and partly illegally, through outright tax evasion. In the past year, Viktor Restis, a shipping company owner, was arrested under suspicion of money laundering.


Wednesday, June 18, 2014

Fidelity Joins Prudential as Biggest Funds Go Greek

June 18, 2014

The world’s largest investors are putting their trust in Greece’s government bond market as record-low yields across Europe compel them to invest in the country that sparked the region’s sovereign debt crisis.

Prudential Financial Inc. (PRU) owns Greek bonds maturing in five years or less and yen-denominated securities to capture the nation’s higher yields. Jupiter Asset Management Ltd. has been increasing its holdings since October and Fidelity Worldwide Investment said it has been steadily building a larger position over the past six months. Those investors, whose assets exceed $1.4 trillion, join the ranks of Invesco Ltd. (IVZ), BlackRock Inc. (BLK) and Legal & General (LGEN) Investment Management owning Greek debt.

“All the different euro-zone countries have different challenges and those facing Greece are among, if not the most, serious,” Robert Tipp, the Newark, New-Jersey based chief investment strategist at Prudential’s fixed-income unit, said in a telephone interview on June 12. “But there are a couple of things that Greece has in its favor in terms of the bond market. The relative value is attractive and the likely long-term course of these bonds is favorable.”

Greece returned to international markets after four years in April, selling 3 billion euros ($4.1 billion) of five-year securities and attracting bids in excess of 20 billion euros for the notes. Since then, yields on euro-area bonds have plummeted to record lows as the European Central Bank unveiled a package of stimulus measures to boost the region’s economy and combat the threat of deflation.


Tuesday, June 17, 2014

Is Greece Really Back?

by Mohamed A. El-Erian


June 17, 2014

It has been two years since Greece narrowly avoided an exit from the euro area that could have been disastrous for the country and extremely challenging for Europe and the global economy. Although the country has made a lot of progress since then, markets are far too sanguine about its rehabilitation.

On June 17, 2012 -- exactly two years today -- when Greeks went to the polls in parliamentary elections seen as a referendum on the government's austerity measures, investors were right to be worried about the country's economic future. An exit from the single currency, with all the financial chaos that could entail, was a clear and present danger.

Now, the seemingly-tentative coalition that emerged from those elections has steered Greece to relative safety. But the attendant sharp drop in the government's borrowing costs, and investors' hearty appetite for new issues of Greek sovereign and bank bonds, overstate the domestic improvements.

The rally in Greek assets has been turbocharged by a global quest for yield amid western central banks' extraordinary efforts to keep interest rates low. To hold on to foreign capital and reduce the chances of further instability, Greece must do more to improve its economic health.


Sunday, June 15, 2014

Interview by Greece’s newspaper Ethnos with IMF Mission Chief for Greece, Poul Thomsen

June 15, 2014

According to your report, Greece will need more money in the next few years. You also talk about the need for Greece to meet its needs. On the contrary, the Prime Minister calls for correction of the injustices against the people. Where will Greece find the money that you say it needs?

We currently estimate the financing needs through the end of the program in March 2016 to be about €30 billion, of which €18 billion can be covered through funds already committed by the IMF and Greece’s European partners. The remaining financing gap is about €12½ billion, which could be covered from a number of sources, including market financing. Thus, it is not clear yet whether Greece will need new money from its European partners.

Which scenario “scares” you the most in terms of political and economic developments in Greece?

The key challenge is to continue implementing structural reforms that are essential to achieving strong, sustained, and balanced growth over the medium term.

The Prime Minister and the new finance minister talk about the need to reduce taxation and ease austerity measures. There are rumors around that they have already decided “no more measures, enough is enough.” What's your response? And what is going to happen if the Troika asks for measures and Greece refuses to take them?

We have just completed a review, and I am confident that the government will meet the commitments that they have undertaken in this regard. After all, the government’s determination is demonstrated through its performance on the fiscal targets, which has been exceptional by any international comparison.

As for measures, we support the authorities’ desire to avoid across-the-board cuts in wages and pensions. But this is also why it is important to press ahead with structural reforms to modernize Greece’s fiscal institutions, such as strengthening tax administration, where progress continues to lag, so that everyone pays their fair share of taxes. Only with progress in these areas will it be possible to avoid further painful expenditure cuts.


Friday, June 13, 2014

Where Is Greece’s IMF Apology?

by Simon Nixon

Wall Street Journal

June 13, 2014

Last week Christine Lagarde made an apology to the U.K. What a shame the International Monetary Fund boss didn’t extend a similar courtesy to Greece this week. No damage was done by the IMF’s crass warning last year that the U.K. government was “playing with fire” by pushing ahead with its deficit-reduction strategy since it turns out the U.K. had already embarked on what has turned out to be a remarkable recovery. But the IMF’s mis-steps in Greece last year had real consequences.

The IMF’s refusal to believe that Greece would achieve a budget surplus before interest costs in 2013 led to a seven-month delay in the disbursement of crucial bailout funds, which in turn delayed the country’s return to the bond markets that has since fueled a revival in confidence and funding. Indeed, had Athens capitulated to IMF demands for further fiscal measures to meet the imaginary deficit, Greece would almost certainly be facing a seventh consecutive year of recession. As things stand, Greece delivered a 0.8% primary surplus last year and new data this week shows it is well ahead of budget for a 1.5% surplus this year.

But even if the IMF couldn’t bring itself to say the S-word, its latest review of Greece’s bailout program published this week shows plenty of signs of contrition. It talks of “significant progress towards rebalancing the economy” and acknowledges that turning the weakest cyclically adjusted fiscal position in the euro area into the strongest in just four years is “an extraordinary achievement by any international comparison”. It says that “structural reforms are progressing, although unevenly,” growth risks could be “tilting to the upside in 2014” and expresses “cautious optimism” for the future.


Greece Wars With Courts Over Ways to Slash Budget

by Niki Kitsantonis

New York Times

June 12, 2014

The Greek government has made a range of painful cuts to salaries, pensions and jobs for public workers over the last four years, saying they were needed to satisfy the demands of the international creditors that bailed the country out. But the Greeks hurt by those steps, and the nation’s courts, have a different idea.

Steadily, citizens groups — including police officers, university professors, cleaning workers and judges themselves — have challenged the cuts as illegal or unconstitutional. And in case after case, Greek courts have agreed, presenting a nearly existential question for the government: Can it actually shrink the state?

The mounting pile of judgments has now become a serious obstacle to the austerity drive of Prime Minister Antonis Samaras, with the International Monetary Fund warning this week that the “adverse court rulings” threaten to undo the country’s reforms, which its creditors are scheduled to begin reviewing in July.

Coming just as an embattled Mr. Samaras tries to convince citizens and investors that Greece is finally turning a corner, the rulings threaten to punch a gaping hole in the finances of the government. Besides potentially having to reverse many of its public-sector layoffs, Greece could be obliged to scramble for one billion euros, about $1.35 billion, in back pay.


Thursday, June 12, 2014

Greek Economy Expected to Return to Growth This Year

by Stelios Bouras

Wall Street Journal

June 12, 2014

Greece's central bank said it expects the country to exit a six-year recession this year, but warned that any complacency on reforms could thwart the economy's positive momentum.

In its annual monetary policy report released Thursday, the Bank of Greece forecast that the Greek economy will expand by about 0.5% this year, since the country's severe recession began bottoming out at the start of 2013.

The forecast jibes with estimates from the Greek government and its international creditors, who predict gross domestic product growing 0.6% this year.

"There remain, however, many uncertainties and risks which could delay or even reverse this path to recovery," said the report, the last to be signed by the central bank's outgoing governor, George Provopoulos. "In order to avert risks, the restructuring of the economy and the reforms must continue with even greater resolve across all areas," it added.

Mr. Provopoulos's six-year term as governor ends next week, when he will be succeeded by former Finance Minister Yannis Stournaras.


Tuesday, June 10, 2014

Greece: Fifth Review Under the Extended Arrangement Under the Extended Fund Facility, and Request for Waiver of Nonobservance of Performance Criterion and Rephasing of Access

International Monetary Fund
Country Report No. 14/151
June 10, 2014

Extended Arrangement. On March 15, 2012, the Executive Board approved a four-year arrangement in the amount of SDR 23.79 billion (2,159 percent of quota; €28 billion). Purchases totaling SDR 7.2 billion (€8.1 billion) have been made so far, and a purchase in the equivalent of SDR 3 billion (€3.5 billion) is proposed to be released on the completion of the review. Euro area countries have so far disbursed €139.9 billion since this program’s approval (of €144.6 billion committed), of which €48.2 billion was for bank recapitalization. Developments. Significant progress has been made toward rebalancing the economy. The fiscal primary and external current account balances are in surplus. Investor sentiment has improved, and the government successfully placed a medium-term bond. The economy is poised to grow in 2014, after six years of deep recession. All this bodes well for a potentially virtuous cycle of recovery to take hold. But a number of challenges remain to be overcome before stabilization is deemed complete and Greece is on a sustained and balanced growth path. The real exchange rate remains overvalued, and non-tourism exports are relatively weak. Banks face a mountain of bad loans that will require adequate capital and oversight to clean up, absent which the prospects are of a prolonged deleveraging antithetical to the assumed recovery. Fiscal gaps are projected for 2015–16, and public debt remains very high. Policies. The authorities over-performed significantly on their 2013 fiscal primary balance target, achieving a surplus of 0.8 percent of GDP. Although the carryover of the over- performance to 2014 is small, the authorities are on track to achieve this year’s target. They are implementing a number of structural reform commitments, with a notable acceleration of product and service market liberalization, where progress has lagged. However, in the area of labor market reforms, where Greece has made important progress in the past, the program is now falling short of targets. Following the Bank of Greece’s stress tests, the HFSF buffer has been set aside to safeguard financial stability, and ambitious steps are planned to strengthen the private debt resolution framework. Reforms to tax codes have been legislated, aimed at simplifying the system and making tax administration easier and, thus, addressing longstanding weaknesses. But at the same time, the authorities need to guard against pressure to rollback progress. On public administration reform, progress is mixed as Greece is struggling to introduce performance-based management and address the taboo against mandatory dismissals.