Central Bank of Greece Governor Yannis Stournaras outlined the outlook and dangers for the Greek economy in the future in an address to the Second EU-Arab World Summit entitled “The Greek economy: the prospects and the main challenges.
Stournaras urged Greek banks to intensify their efforts to implement a three-pronged plan: dealing with bad loans, expediting the sale of loan portfolios, and selling off assets.
The central bank governor called for an extremely rapid completion of the third evaluation of Greece’s bailout programme, expected by year’s end, noting that otherwise one faces a new cycle of uncertainty.
Stournaras called for the completion of required reforms in all sectors, as that will signal the start of the discussion of debt reprofiling, permit Greece to participate in the ECB’s quantitative easing programme, and allow a smooth return to the markets after the end of the programme.
Stournaras outlined ways in which the adjustment programme has produced results, including an increase in competitiveness and the recapitalization of the Greek banks.
“The economy is now on the rebound and the rates of growth are increasing,” he said
He projected that GDP will increase by 1.7 percentage points for 2017, 2.4 percentage points in 2018, and 2.7 percent for 2019.
Noting that more remains to be done, he cited the challenges of dealing with high levels of unemployment, the high level of debt, and the high level of banks’ non-performing loans.
“These three issues, combined with the need for substantial investments aiming at improving the economy and modernising public and private infrastructure, will be Greece’s main challenges over the coming years,” said Stournaras.
At the same time, the central banker said that the EU must specify the medium-term measures for the restructuring of debt, based on the agreement reached in the Eurogroup and in close cooperation with Greek authorities, and detail the forms of support for the Greek economy after the completion of the current adjustment programme.