ATHENS, Greece — The international bond markets will likely wait until the end of the year before passing judgment on Greece's efforts to overhaul its economy and pull itself out of a debt crisis that nearly led to the country's bankruptcy earlier this year, the finance minister said Monday.
George Papaconstantinou told The Associated Press in an interview that the markets have yet to be fully convinced by the raft of reform and austerity measures the government has introduced over the last few months in return for a financial lifeline from its partners in the eurozone and the International Monetary Fund. As a result, Greece's cost of borrowing remains way too high for the government to tap the markets for cash yet.
"They (the markets) need the time," he said. "We believe at the moment they are overpricing Greek risk."
The finance minister said the markets will be interested to see if the government hits its targets this year, including whether it manages to reduce its deficit from 13.6 percent of gross domestic product in 2009 to 8.1 percent.
"I think you will see a change starting in early 2011 which would allow us to come back to the market sometime in 2011," Papaconstantinou said.
Greece has essentially been shut out of borrowing on the international market for months, after an admission that the previous government had fudged the country's financial statistics sent its borrowing costs spiraling to unsustainable levels.
Unable to tap the markets and in danger of defaulting on its debt, Greece sought help from the IMF and the eurozone and is currently receiving rescue loans from a three-year €110 billion package.
In return, it is implementing a strict austerity plan that has seen it cut civil servants' salaries, trim pensions, overhaul the social security and pension systems and increase taxes.
The country is "at the most difficult point" of pulling itself out of the crisis, Papaconstantinou said.
Athens has already said it will start issuing monthly treasury bills from September, but Papaconstantinou said it was still unclear when the government might test the waters with a longer-term bond.
"It will depend on how quickly conditions normalize," he said, adding that "it's clear that at the moment it is of course way too early for that."
Greece can continue drawing rescue loans for three years, provided it meets all the targets in each of its quarterly reviews. It is due to receive the second installment in September, after an EU and IMF review said the country had made "remarkable" progress in its reforms.
The minister said it was too early to speculate on whether Greece would try to leave the rescue program early or ask for an extension.
"There is a program with a specific timetable, we're abiding with that at the moment and we're not having second thoughts about alternative timetables," he said.