The winds of austerity are weakening in the Aegean and the Mediterranean. In Nicosia, the bailout program had a positive outcome, while Athens let it be known that cost containment will be enough to compensate for the shortfalls.
In Cyprus, Prime Minister Anastasiades announced that the capital controls that have been in place since the beginning of the crisis will most likely be lifted from January of the new year. Meanwhile, good news is coming from the Eurogroup and the International Monetary Fund, which approved the positive outcome of the first review of the bailout program and gave the go-ahead for the disbursement of the next tranche of aid, amounting to around 1,6 billion euros, by the end of September. The country - writes the Banca Intesa research center - is on the right track to comply with the fiscal constraints established in the bailout plan for 2013, although the risks remain high, especially with regard to the macroeconomic scenario.
In Greece, meanwhile, Prime Minister Samaras has announced that no new austerity measures will be implemented for the two-year period 2015-16, even considering that the financing requirement for the two-year period 2014-15 will be only €2,5 billion and not the 4,0 billion (2% of GDP), estimated by the Troika. Athens plans to compensate for this shortfall only through "structural measures" to contain costs. The Government also estimates that Greek GDP should contract by 3,8% this year (less than the 4,2% expected by the European Commission) and return to growth in 2014 (+0,6%).
