Debt, un­em­ploy­ment, NPLs weigh on Greece

Kathimerini English - - Focus -

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.

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