Greece has seven to eight months to turn around its recession-hit economy and make use of EU funds and a landmark debt rollover or market fears will return, the prime minister's economic advisor said on Monday. "The measures we are adopting now will start to pay off" in seven to eight months, Gikas Hardouvelis, economic advisor to Prime Minister Lucas Papademos, told financial website capital.gr in an interview.
"Otherwise, we might go back to where (this government) started, to a revival of fears over Greece," he said. Greece and private investors on March 12 completed the first phase of a bond swap designed to ease debt repayment and give Athens time to rebuild its shattered economy.
The exchange erased more than 94.8 billion euros in near and mid-term debt issued under Greek law, while debt issued under international law will be exchanged next month. Greece's parliament last week also ratified a 130-billion-euro ($172-billion) eurozone bailout that will help meet Athens' financing requirements to 2015. Hardouvelis, formerly chief economist and head of economic research at Greece's third largest lender Eurobank, said the bailout "puts off the danger ... of an immediate return to the drachma."
But he added: "We have some way to go to remove the country from this risk for good." Greece is to hold early elections by early May. The government's priorities before parliament is dissolved after April 15 are to redistribute EU support funds to promote growth and to recapitalise Greek banks who took losses under the debt swap, Hardouvelis said. "Healthy banks must be recapitalised before the summer, leaving the troubled ones for later, so that the healthy banks can help out (the economy)," the advisor said.