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Bank of Greece: “Greece’s economy gradually returns to normality”

“Greek economy is gradually returning to normality,” the governor of  Bank of Greece, Yannis Stournaras, said on Tuesday. Briefing the Parliament about the BoG interim report on Monetary Policy 2019. Among others, he stressed the need to deal with the high rates of non-performing loans and to reduce the primary surpluses.

Sournaras said he expected the Greek economy to grow by 2.5%t this year and in 2021, after a 2.25 growth rate estimated in 2019.

Regarding the primary surpluses, he said that based on Bank of Greece estimates “a reduction of official targets for primary surpluses in 2021 and 2022 to a more realistic level of around 2.2% (from 3.5% currently) would not affect the sustainability of public debt and could boost economic growth if combined with a timely implementation of reforms and privatizations.”

Commenting on an increase in deposits by 2.0 billion euros in December, to a total of 155 billion euros from 120 billion in July 2015, he said it was positive that money was returning to banks.

Stournaras noted that a decisive implementation of reforms and an accelerating reduction of NPLs will further enhance investors’ confidence in Greece’s economic prospects, counterbalancing the impact of adverse demographic developments.

Referring to the “Hercules” asset protection scheme, he said that it was a very important step, which had worked in Italy and other countries, “but not sufficient, given the size of the problem”.

“We need more means. We must throw our entire arsenal at NPLs,” Stournaras said, adding that the advice he got from his counterparts facing a similar problem was that banks should look to the future and not use funds for problems of the past, such as NPLs.

He stressed that “Hercules” was not the only method. There was also what the finance ministry was doing in terms of modernising the solvency framework and bankruptcy law.

PS If the majority of “non-performing loans” has been already sold to funds, why should the BoG care?

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One comment

  1. It’s difficult to understand from these inane comments that stournaras actually ever studied economics. Normality? Does he mean normal for 1970? And I too wonder what these looneys are doing with NPLs. This is all just political drivel.