Debt, unemployment, NPLs weigh on Greece
Greece’s banks have shown progress in tackling a stockpile of nonperforming loans, Bank of Greece Governor Yannis Stournaras said yesterday, although he added that it would remain a challenge for the country. Greek banks are saddled with 103 billion euros in bad loans, equal to almost 60 percent of the economy, after years of financial crisis and crippling recession. The European Central Bank wants that reduced by 38 billion euros by the end of 2019. “Incoming data point to a reduction in NPEs [nonperforming exposures] and this is mainly driven by loan write-offs,” Stournaras told the 2nd EU-Arab World Summit in Athens. “However, banks should utilize all the available toolbox to reduce troubled assets, and in particular speed up the sale of NPLs.” Stournaras said high public debt and unemployment were also key challenges to the Greek economy, which is starting to show signs of growth after a crippling eight-year recession which sapped a quarter of its national output. The economy was expected to grow 1.65 percent this year and 2.4 percent in 2018, Stournaras stated. But moving forward, the jobless rate, toxic loans and the public debt mountain representing almost 180 percent of national output needed to be addressed, he said. The Bank of Greece, Stournaras said, had put forward a proposal to extend the weighted average maturity of interest payments on loans issued by the European Financial Stability Facility (EFSF) by at least 8-1/2 years. “This mild debt reprofiling proposal is vital for debt sustainability in Greece, while it involves only a negligible cost for its partners,” he said.