As Greek government officials race against time to finalize a bailout agreement reached with the European Union and International Monetary Fund, there is cautious optimism that the country is making small steps to reverse the course of financial collapse.
Last week’s trading trends on the Athens General Composite Stock Exchange (ATG) appear to indicate that confidence in the country’s business and investment prospects are slowly picking up.
While the ATG suffered a 23 per cent drop – largely due to banking shares plummeting 30 per cent – on its first day of trade after a five-week closure on August 3, it began to recoup losses by the end of the week.
On Thursday, it closed up 3.65 per cent after Greece’s banking index began to rise again; on Friday it rose another 2.3 per cent before closing at 1.45 per cent up from the previous day.
When markets open on Monday, the overall drop since banks closed on June 26 will stand at 15 per cent. Year-on-year, however, the ATG has dropped 38 per cent.
The greatest challenge for the banking index, which makes up 20 per cent of the ATG, is recapitalization.
As the Grexit crisis peaked in June and July, Greeks withdrew billions of dollars from their accounts, forcing a 60-euro daily limit on withdrawals.
EU experts estimate that the banking sector needs a minimum of $10 billion – or as much as $25 billion – in recapitalization.
Meanwhile, a negotiating team lead by Finance Minister Euclid Tsakalotos has concluded two days of intense talks with EU and IMF officials over the details of the austerity reforms demanded by European creditors as conditions for the new $94 billion bailout package.
Greek media quoted officials who said they expect to have the negotiations about reforms, which include significant cuts in defence and agriculture subsidies, to wrap up by August 11 with the final agreement sent to parliament a few days later.
Greece wants to finalize and ratify the deal by August 18 in order to receive funds from the package that it will use to repay a $3.5 billion loan to the European Central Bank.
The BRICS Post with inputs from Agencies