Greece PM welcomes 'liberation' from bailout terms but tough economic decisions loom

Picking the western island of Ithaca, the home place of Odysseus, the mythical Mycenaean king whose arduous 10-year travels are immortalized in Homer's Odyssey, Prime Minister Alexis Tsipras said Greece was ready to become a "normal" country again.

Further cuts in pensions, tax hikes may be on the horizon regardless of who holds power after 2019

Greek Prime Minister Alexis Tsipras speaks during a state address from the island of Ithaca on Tuesday. Greece reluctantly accepted terms from the EU and IMF, and Tsipras has pledged to keep the country on a sound economic course. (EPA-EFE)

Prime Minister Alexis Tsipras hailed the end of a "modern-day Odyssey" on Tuesday after Greece emerged from nine years of bailouts, saying it should never forget the harsh lessons learned under tight financial supervision by its creditors.

"This is a day of liberation," Tsipras declared, standing on a hilltop overlooking a bay on the Ionian island of Ithaca.

"Now we have reached our destination," he said. "The bailouts that carried with them austerity and recession and turned our country into a social desert are over."

His decision to give a post-bailout speech on the island was laden with classical symbolism: in Homer's epic poem, Odysseus, the King of Ithaca, returned home from the Trojan war after a 10-year voyage lost at sea.

Our country is regaining its right to define its own fortunes and future. Like a normal European country, without having policies forced on it by foreign officials, with no more blackmail, no more sacrifices for our people.- Greek PM Alexis Tsipras

Looking sombre, Tsipras said: "We will not commit the affront of ignoring the lessons of the bailout on Greece. We will not let oblivion mislead us." And he added: "We will never forget the cause, or the people who led our country into bailouts."

Greece's third bailout deal ended on Monday after international creditors had bankrolled the country in return for tough reforms and austerity monitored by their inspectors since 2010.

Tsipras, a leftist elected in 2015 promising to tear up bailouts, was forced instead to accept a loan package that August to stave off bankruptcy and the prospect of the country being ejected from the euro zone.

It was the nation's third since 2010, and the country has altogether received 288 billion euros ($432 billion Cdn) from creditors, making it the biggest bailout in history.

The bitterness was still apparent in parts of his speech.

"Our country is regaining its right to define its own fortunes and future," said Tsipras "Like a normal European country, without having policies forced on it by foreign officials, with no more blackmail, no more sacrifices for our people."

Elections next year

Dressed casually in a white open shirt and slacks, Tsipras drew frequent analogies with the Odyssey, in which the hero was called to deal with the Cyclops, sirens and unruly suitors plotting to take his place — a dig at the opposition New Democracy party, which is leading in opinion polls.

"Ithaca will once again be identified with the end of a modern-day Odyssey," he said.

"Three-and-a-half years ago our people took a historic decision. To take the helm away from those who led it to the rocks, and to give it to new captains," Tsipras said, referring to the election victory of his Syriza party.

He faces elections next year.

Former prime minister George Papandreou, who applied for the first bailout from Greece's eurozone partners and the International Monetary Fund in April 2010, also drew on the Odyssey analogy at the time.

"We are on a difficult path, a new odyssey for Greece and for the Greek nation," Papandreou said at the time. "But we know the way to Ithaca, and we have charted the waters in our quest."

Austerity and political turmoil followed, shrinking the economy by a quarter, pushing a third of the population into poverty and forcing the migration of thousands abroad.

More bailouts followed in 2012 and 2015 saddling the country with debt equivalent to 180 percent of its annual economic output, despite relief on repayments of its official debt and a writedown of bonds held by private creditors.

In return for the debt relief, Greece will have to maintain primary budget surpluses — excluding debt repayments — in the coming years, and further cuts in pensions and tax hikes may be in the offing over the next two years.

After that, it will really have to stand on its own feet and as such it will have to take consideration of the demands of investors in international bond markets — any slippage on the budget front could see the interest rates they charge for Greece to borrow rise again, potentially to unsustainable rates.

With files from The Associated Press