BoG: Deal, or mo­men­tum is lost

Cen­tral bank warns that if the re­view isn’t sealed quickly, the growth an­tic­i­pated this year will be put at risk

Kathimerini English - - Focus -

The Bank of Greece is stick­ing to its fore­cast which sees the econ­omy ex­pand­ing 2.5 per­cent this year, ac­cord­ing to its an­nual re­port pre­sented yes­ter­day by Gov­er­nor Yan­nis Stournaras, though he warned that the econ­omy will face a se­ries of un­cer­tain­ties un­less an agree­ment is reached swiftly by the gov­ern­ment and the coun­try’s cred­i­tors.

Ad­dress­ing a gen­eral meet­ing of the cen­tral bank, Stournaras warned that those un­cer­tain­ties could be ex­ac­er­bated if Greek state bonds do not find their way into the Euro­pean Cen­tral Bank’s quan­ti­ta­tive eas­ing (QE) pro­gram. If the un­cer­tainty is ex­tended, it will also serve as a de­ter­rent for for­eign in­vest­ments that are a nec­es­sary con­di­tion for growth, he added.

“How­ever we could have some [good] re­sults in a very short pe­riod of time,” Stournaras said in his speech, not­ing that a so­lu­tion to the im­passe in the talks is pos­si­ble if both sides show flex­i­bil­ity.

“Risks are emerging from the de­lays and the post­pone­ments in the im­ple­men­ta­tion of re­forms de­cided and by the anti-com­pet­i­tive mar­ket dis­tor­tions that may dam­age cru­cial sec­tors of the econ­omy,” the re­port reads.

The cen­tral banker re­it­er­ated Greece’s com­mit­ment to the euro­zone and the Euro­pean Union and made it clear that the bailout pro­gram is set­ting the coun­try on a growth course.

“The 2016 per­for­mance re­veals the prospects of the econ­omy,” he said, stress­ing that the Bank of Greece’s fore­cast for 2.5 per­cent growth in the econ­omy this year is con­di­tional on the con­clu­sion of the cur­rent bailout re­view, which re­sumes on Tues­day.

The re­port notes that the 2016 pri­mary bud­get sur­plus will amount to 2 per­cent of gross do­mes­tic prod­uct and ex­pects the tar- +1.0609 get of 1.75 per­cent for 2017 to be at­tain­able.

On the bank­ing sys­tem, Stournaras warned that the bad­loan re­duc­tion tar­get (by 40 bil­lion eu­ros up to end-2019) will be put at risk un­less the re­view is rapidly sealed, and con­firmed re­ports that Jan­uary wit­nessed an ac­cel­er­a­tion in the cre­ation of fresh non­per­fom­ing loans along with a re­duc­tion in the re­sponse by debtors to the pro­posed set­tle­ment plans.

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