De­lay in Greek re­view threat­ens re­cov­ery: cbank

The Pak Banker - - COMPANIES/BOSS -

Greece's cen­tral bank gov­er­nor warned that fur­ther de­lay in com­plet­ing a first re­view of the coun­try's bailout re­forms could im­peril a pro­jected eco­nomic re­cov­ery in the se­cond half of this year.

Bank of Greece Chief Yan­nis Stournaras has re­peat­edly un­der­lined the need to im­ple­ment re­forms the left­ist-led govern­ment agreed with of­fi­cial lenders un­der a third bailout clinched last July, say­ing any back­track­ing en­tailed risks.

Re­form­ing Greece's ail­ing pen­sion sys­tem is a pre­req­ui­site for the con­clu­sion of the re­view, which is ex­pected to open the way for debt re­lief talks, but the govern­ment is fac­ing protests from farm­ers and other groups of work­ers.

"Ev­ery hour that we fail to com­plete the re­view weighs on con­fi­dence," Stournaras told the Greek par­lia­ment's eco­nomic affairs com­mit­tee. "It (com­ple­tion) should have been done be­fore the end of last year."

"So­cial and political con­sen­sus is very im­por­tant, Cyprus is the clos­est ex­am­ple. It ex­ited the bailout faster than us," he added, stress­ing the need to per­suade Greeks of the need for fur­ther sac­ri­fice to get the econ­omy back on an even keel.

Eurogroup head Djis­sel­bloem said last month the con­clu­sion of the first re­view of Greek re­forms could take months rather than weeks. There are also con­cerns in Europe that the re­view might be de­railed by do­mes­tic pol­i­tics. Prime Min­is­ter Alexis Tsipras has a par­lia­men­tary ma­jor­ity of just three.

A pos­i­tive as­sess­ment of Greece's re­forms by its of­fi­cial lenders would boost con­fi­dence, im­prove the bank­ing sys­tem's liq­uid­ity through the re­turn of de­posits and pave the way for a fur­ther loos­en­ing of cap­i­tal con­trols.

Stournaras told deputies the Bank of Greece would pay the state a large div­i­dend of around 700 mil­lion euros on the prof­its it has made from pro­vid­ing bil­lions of euros of emer­gency fund­ing to the coun­try's banks. Greece's banks will not need an­other re­cap­i­tal­i­sa­tion this year or in the fu­ture if they man­age well their load of non-per­form­ing loans, he added.

The Bank of Greece, which su­per­vises a 9.5 bil­lion euro port­fo­lio of 14 bad banks af­ter a wave a con­sol­i­da­tion, has so far man­aged to re­cover 800 mil­lion euros of low qual­ity loans.

"This shows that banks could at least re­cover 10 per­cent out of the 100 bil­lion euros of non­per­form­ing loans," he said.

Asked about the im­pact of Europe's mi­grant cri­sis on the Greek econ­omy, Stournaras said tran­sit coun­tries such as Greece bear sub­stan­tial costs while fi­nal-desti­na­tion coun­tries such as Ger­many en­joy long-term ben­e­fits from an ex­panded work­force.

Athens is speed­ing up the com­ple­tion of five mi­grant cen­tres and two re­lo­ca­tion camps af­ter the Euro­pean Com­mis­sion ac­cused it of ne­glect­ing its du­ties as a mem­ber of Europe's pass­port-free Schen­gen zone Stournaras said Greece would suf­fer sig­nif­i­cantly in terms of goods trans­porta­tion and tourism if the EU fol­lowed up on its threats to ex­pel the coun­try from Schen­gen.

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