May 26, 2016 / 3:57 PM / 2 years ago

Greece hopes to qualify for ECB's QE, cheap bank lending swiftly

ATHENS (Reuters) - Greece’s finance minister said on Thursday he hoped Athens could swiftly qualify for the European Central Bank’s quantitative easing (QE) program after the successful conclusion of its first bailout review this week.

Greek Finance Minister Euclid Tsakalotos speaks during a news conference next to Alternate Finance Minister George Chouliarakis (R) at the ministry in Athens, Greece May 26, 2016. REUTERS/Alkis Konstantinidis

After six months of tense talks, Greece reached a deal with its foreign creditors which will unlock desperately needed bailout loans and agreed on steps that will help relieve its debt mountain.

“With this review one of our aims was ... to enter the quantitative easing program, which we hope will come very soon,” Euclid Tsakalotos told reporters two days after the decisions by euro zone finance ministers.

Under the QE program, the ECB is currently buying 80 billion euros of bonds each month to pump new stimulus funds into the euro zone economy. Tsakalotos said he was optimistic the ECB would also soon resume accepting Greek government bonds as collateral for lending funds to Greek banks.

Both actions, he said, would “send a message to the markets that Greece is like every other country”.

Asked if the government would ease capital controls imposed last June to arrest a run on deposits, Tsakalotos said it depended on the return of bank deposits. He said he was confident a more stable banking environment would give Athens room to undo the restrictions.

“I think capital controls depend on how much people will see changes from this deal. It’s very important that for capital controls to unwind, (that) money return to banks,” he said.

Greek Finance Minister Euclid Tsakalotos arrives for a news conference at the ministry in Athens, Greece May 26, 2016. REUTERS/Alkis Konstantinidis

Deputy Finance Minister George Chouliarakis told reporters Greece could return to bond markets next year.

“Our intention is to do this (tap markets) when there is stabilization and after the economy recovers, and start in 2107... but we don’t want to rush,” Chouliarakis said.

Athens will not need to adopt any further measures until the end of the bailout program, he said, adding the disbursement of the 10.3 billion euro aid in two tranches would help boost economic activity.

Athens wants to use a big chunk of the funds to pay off state arrears, a move which Chouliarakis said would offset the impact of the austerity measures, tax hikes and pension reforms that Greek lawmakers approved to qualify for the funds.

The rest will be used to pay off IMF loans and ECB bonds.

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But Chouliarakis cautioned that Greece will not be able to maintain long-term primary surpluses of 3.5 percent of GDP, a target set in its current bailout for 2018, adding that it was rare for any country to reach that target.

Reporting by Lefteris Papadimas and Michele Kambas; Editing by Mark Trevelyan

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