Yasou: Greece Is Pulling Off an Amazing Recovery

http://www.businessweek.com/articles/2014-03-27/yasou-greece-is-pulling-off-an-amazing-recovery#r=nav-r-story

Just two years ago, Greece was on the ropes. The yield on the Greek government’s 10-year debt hit a punishing and unsustainable 30 percent. Today the yield is less than 7 percent—a sign that investors are increasingly confident of the nation’s ability to pay its debts. Rarely has a country repaired its image with creditors so quickly. What went right is that the troika of foreign official lenders gave the Greek government inexpensive loans so that it never had to borrow at those exorbitant open-market rates. And the Greek government was surprisingly successful at cutting spending, which was essential to regaining investors’ confidence. The Hellenic Republic managed to achieve “primary” balance—that’s when revenue exceeds spending, excluding debt service—a year ahead of schedule. Still, Greece continues to face enormous challenges. The main one is that belt-tightening isn’t enough. Greece must also remove subsidies and barriers that protect politically entrenched interests while costing the general public and inhibiting growth. So it’s not all good news out of Greece. But there’s no question that the country is better off now than when its bond yields were at 30 percent.