ESM urges Greece to ready market borrowing strategy

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FILE PHOTO - European Stability Mechanism Managing Director Regling attends a conference in Nicosia

BRUSSELS (Reuters) – Greece should develop a strategy for its return to market borrowing and raise private finance before its euro zone bailout program ends in a year’s time, the head of the European Stability Mechanism said on Monday.

Klaus Regling told reporters “Greece will not need that much borrowing from the markets in the future” once bailout funding via the ESM ends in August 2018. It would be required only to replace maturing debt, given Athens’ predicted fiscal surpluses.

However, the chief executive of the euro zone bailout fund noted that other countries — Ireland, Portugal and Cyprus — had returned to borrowing in markets “well before” the end of their programs, in order to avoid a possible gap in funding.

Noting that Greece had, with the exception of two bonds in 2014, been absent from the markets since the onset of the euro zone debt crisis in 2009, Regling said: “Therefore it’s important for Greece to develop a strategy to go back.”

It was important for Greece to develop its strategy, including communicating with investors and reassuring them of its commitments to the reforms which euro zone sovereign creditors have demanded, said Regling, who added that he had discussed the issue with Greek officials in the past two weeks.

He was speaking after a monthly Eurogroup meeting with euro zone finance ministers at which Greece had not been on the agenda — an unusual occurrence in recent years, that was due to the approval last month of the latest installment of the bailout.

Regling said the funds had reached Athens on Monday.

(Reporting by Alastair Macdonald; Editing by Francesco Guarascio; editing by Ralph Boulton)

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