Yahoo Finance Why now may be the best time to invest in Greece
As the IMF pushes for easing of interest payments, investors wonder if Greece is risk-free.
It wouldn’t be spring without a little Greek debt drama. Enter the International Monetary Fund that earlier today proposed a plan in which the eurozone would allow Greece to avoid both interest and principal payments on bailout loans until 2040.
According to a report in the Wall Street Journal:
The IMF wants eurozone countries to accept long delays in the repayment of Greece’s bailout loans, which would fall due in the period from 2040 to 2080 under the proposal, according to officials familiar with the talks.
The IMF is also pressing for Greece’s interest rate on its eurozone loans to be fixed for 30 to 40 years at its current average level of 1.5%, with all interest payments postponed until loans start falling due.
Yahoo Finance caught up with former Greek Prime Minister George Papandreou at last week’s SALT Conference in Las Vegas. A persistent theme at the gathering of hedge fund managers and other financial professionals was that now is a good time to start putting money back to work in Greece. Papandreou agrees. “Greece has gone through a huge adjustment," he says. “We have lost 25% of GDP, but the prices have adjusted and the recent government has finally take the necessary measures, very difficult, to comply with the creditors demands."
For those worried about lingering risks, Papandreou notes that banks in his country have been re-capitalized and plenty of companies now need investment to get on their feet.
The former prime minister said that the country is full of good real estate opportunities (think: vacation home in the Greek Isles), tourism and investment in renewable energies like wind, solar and geothermal.
For those seeking a more traditional Greek investments, Papandreou suggests shipping. “Greeks are number one in the world,” he points out. “They have been basically been financed by Greek banks that have problems, now they’re looking for finance so there are good possibilities for partnerships.”
The future of the Eurozone
It’s not just Greece that has seen investors scared away. The eurozone more broadly has been fraught with risk and a potential “Brexit” would certainly not stabilize things any further.
Still, Papandreou is focused on the progress made over the past few years. “There has been a new architecture of the eurozone because it did have problems,” he says. “So you have Mario Draghi coming out and saying we will do whatever it takes to keep the Euro strong—and he’s been convincing—and the markets did react positively to his statements.”
The former Greek chief also points to the movement toward a banking union that would guarantee money across the EU.
Even with all the progress, he admits that globalization has created new obstacles—such as the refugee crises in the Middle East, Northern Africa and Southern Europe—that continue to stand in the way of progress.
