Governor of the Bank of Greece, Giannis Stournaras, put a break to the ambitious pre-elections announcements and financial promises by several political parties including ruling New Democracy. At the same time, he indirectly intervened in the elections campaign in favor of ruling New Democracy that aims to be the winner of the May 21 elections capable to avoid a coalition government.
“Not enough fiscal space to allow all pre-election announcements,” Stournaras said on Wednesday.
In an interview with newspaper “Imerisia” newspaper, Stournaras warned there is no fiscal space to allow the implementation of political parties’ pre-election announcements.
“Of course, I understand that ahead of the elections things are said that cannot be implemented because if we evaluate correctly everything it is said then we exceed by far any available fiscal space,” the central banker said.
Referring to the “investment grade” for Greece, he said that credit rating agencies will take their decision after hearing the new government’s policy program.
He added that it would be best to have a stable government with a long-term horizon to take all decisions necessary to obtain the investment grade, and decisions that will be included in its policy program.
Stournaras said that the economy was on the right track but the country needed a confirmation of credible economic policy for the coming years and definitely needs a stable government.
He added that the cycle of interest rates rises was nearing its end, but he stressed that we have not yet reached the end.
“We cannot say how many increases will be made. This will depend on estimates on inflation, economic growth and financial conditions. As things stand now and if there would not be anything dramatic ahead, we can say that within 2023 interest rate increases will end,” Stournaras said.
The central banker reassured that Greek banks were well capitalized, they enjoy good liquidity rates, they have strict supervision and undergo extreme stress tests often. He said that the likelihood that anything could happen to Greek banks was thin.
Stournaras said that the economy was on the right track but the country needed a confirmation of credible economic policy for the coming years and definitely needs a stable government.
“The central banker reassured that Greek banks were well capitalized, they enjoy good liquidity rates, they have strict supervision and undergo extreme stress tests often. He said that the likelihood that anything could happen to Greek banks was thin.”
Oh dear – that’s a big red flag.
I presume that means that Greek banks are much better capitalised than American, UK and Swiss banks? I wonder if the data support that?
no need for proof, we trust authorities (lol)