Greece’s last-ditch bailout requires the country to sell 50 billion euros ($55 billion) of assets, an ambition it hasn’t come close to achieving under previous restructuring plans.
The government of then-Prime Minister George Papandreou in 2011 set the same financial goal, which it sought to achieve by hawking airports, seaports, and beachside real estate. Since then, such deals have yielded just 3.5 billion euros, according to the state privatization authority.
Making the asset-sale math work as the economy contracts will be difficult for Greek Prime Minister Alexis Tsipras, who on Monday bowed to demands from European creditors in exchange for a bailout of as much as 86 billion euros that will keep his nation in the euro zone. Half the money from asset disposals is earmarked to pay off emergency loans for teetering Greek banks. They need cash to rebuild their capital buffers and without it may no longer be able to operate.
‘Fifty billion euros is a very unrealistic target,’ said Diego Iscaro, an economist at research firm IHS Inc. ‘Asset prices have been badly hit by the economic depression and we do not expect them to significantly recover any time soon.’
This post was published at David Stockmans Contra Corner on July 15, 2015.
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