5th Oct, 2015, Greece now needs to set the ball rolling

·         Greece’s government agreed with its creditors on the 48 actions which will free up the disbursement of 2 bios euros. It is very important to mention that the local government agreed on these actions during Friday’s Euroworking Group, and before presenting its policy program in front of local Common’s.

·         The new Greek Parliament elected as its new Speaker, the former Interior Minister Voutsis. Local Government will present its policy during the following three days. There will be a vote of confidence of new government, by this Wednesday. In addition, it will submit its budget 2016, by end of today. It appears that this will happen before the start of Eurogroup meeting, as part of an agreement between government and creditors.  

·         According to HRADF - Hellenic Republic Asset Development Fund’s Pitsiorlas, the privatisation of the 14 peripheral airports will be signed off between Greece and the consortium Fraport-Slentel, by end of 2015. This privatisation will include among others, the airports of Rhodes, Thessaloniki, Chania and Lesvos.  

·         HRADF’s Pitsiorlas also added that the project of privatisation of the Port of Piraeus is progressing well, and that it is feasible to have competitive bids by November 2015. However, according to port industry insiders the tender for the sale of 51% of Piraeus Port Authority (OLP) is at risk because of resistance within SYRIZA, local authorities and unions. 

·         British tourists’ arrivals increased by 29.3% and revenues increased by 37.2% during the period Jan-Jul 2015. During the same period, the arrivals of British tourists increased in Spain by 2.9%, in Cyprus by 16.35 while they were decreased by -0.9% in Turkey.         

·         According to Frankfurter Allgemeine Zeitung, European Union and Turkey have agreed on a roadmap as regards the refugees’ crisis. On the other hand, Financial Times mentioned that there is progress in negotiations but no agreement.  

Risk assessment. Greece gradually returns to European normality. The local government completed, in rather fast manner, all pending steps in order to a) form government b) elect new Common’s Speaker. This ended the 9 months of unprecedented, destructive, Eurosceptic, populistic service of the former Chairwomen, Constantopoulou. Needless to say that she didn’t only loose her position as Chairwoman but was not re-elected as MP as well. 

The change of the Speaker is considered as an important development as the Speaker of Commons maintains a significant position in local political system, with considerable agenda setting powers.  

It is important to mention that Greece and its creditors agreed last Friday, on the terms regarding the next disbursement of 2 bios euros.

However, Tsipras needs to set the ball rolling and start the ratification of austerity measures which are included in the 3^rd MoU.

While the new set of austerity measures will hit pensioners and other groups of Greek society which have not impacted significantly so far, such as farmers, islands and private education, the most important pending item appears to be Greek Banks’ recapitalisation. It is important to mention that this represents a very complicated task as it includes participation of private sector.

Although the yield of 10 yr Greek Bonds has been decreased significantly since the 10^th of July (down to 8.27% from close to 20%), the distance compared to other members of Eurozone remains long. At the moment, the confidence regarding Greek economy remains very low and prevents FDIs. The economy requires an investments’ shock which will increase local banks’ liquidity and attract foreign investors as regards the next phase of recapitalisation.

In general, the improvement of investments sentiment won’t happen easily. The government needs to focus on many operational objectives in parallel such as: a) the improvement of state financials due to increase of revenues and/or reduction of expenditure b) the successful implementation of planned privatisations c) the announcement of better than expected macroeconomic conditions i.e. GDP of 3^rd quarter d) the sell of corporate and 'strategic defaulters' NPLs to funds or the creation of a Bad Bank in order to decrease capital requirements.

It seems highly unlikely to see a miracle such as a significant Foreign Direct Investment in a Greek Bank, unless we see improvement in various fronts of local economy. However, remain on my previous view that capital needs of local banks will be less than expected due to a) less deterioration of economy from capital controls b) the sale of parts of NPLs to special funds