The governor of Central Bank of Greece, Yiannis Stournaras wrote his annual report and forwarded it to the Greek Parliament and Tsipras’ cabinet. In his 141-page report Monetary Policy 2014-2015, the former Finance Minister of Samaras-Venizelos government warned that Greece faces an “uncontrollable crisis”, if a deal cannot be reached in the coming days to release €7.2billion in bailout funds and prevent Athens defaulting on its debts.
The governor of BoG wrote among others:
“If a deal can be done in the coming days, it would fend off the immediate risks to the economy, reduce uncertainty and ensure a sustainable growth outlook for Greece.
Failure to reach an agreement would, on the contrary, mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and – most likely – from the European Union,
A manageable debt crisis, as the one that we are currently addressing with the help of our partners, would snowball into an uncontrollable crisis, with great risks for the banking system and financial stability. An exit from the euro would only compound the already adverse environment, as the ensuing acute exchange rate crisis would send inflation soaring.
All this would imply deep recession, a dramatic decline in income levels, an exponential rise in unemployment and a collapse of all that the Greek economy has achieved over the years of its EU, and especially its euro area, membership. From its position as a core member of Europe, Greece would see itself relegated to the rank of a poor country in the European South.”
Stournaras sent the report to the Parliament Speaker and the Greek cabinet. however, Parliament Speaker Zoi Konstantopoulou immediately return the report back with the remark of “never received.”
Konstantopoulou described the report of Bank of Greece as “unacceptable” and criticized Stournaras for “blatant intervention” in the works of the Truth Committee for the Public Debt investigating the legality of the debt. The Committee was to present its preliminary result when the BoG arrived. According to the Parliament Speaker, releasing the BoG report at this specific time was undermining the Government’s efforts to legally ask for a debt relief.
In his report Yannis Stournaras also called on Greece’s creditors to honour their promise to offer debt relief, as part of the second bailout of the country in November 2012. Any new deal must be “based among other things on our European partners’ delivery on their commitments in November 2012 to Greek debt relief, which now need to be specified in greater detail”, he argued.
Full report Bank of Greece in Greek here
Report Summary in English here
PS The governor of BoG who as FinMin imposed non-stop austerity for the low and medium incomes writes “no deal would lead initially to a Greek default and ultimately to the country’s exit from the euro area and – most likely – from the European Union”? I have the feeling there is the fear-mongering creditors speaking here.