BoG chief sees signs of stagnation, calls for ‘fiscal prudence’
Yannis Stournaras warns against complacency and reform fatigue; growth is seen at 2.3%
Bank of Greece Governor Yannis Stournaras on Monday stressed Greece’s need to continue the reforms and warned against complacency.
Addressing the general assembly of the central bank Stournaras spoke of a major challenge of reform fatigue, while citing data showing stagnation and a slight decline in the country’s competitiveness over the past year.
At the same time, he underscored the need for “fiscal prudence,” which translates into primary surpluses of at least 2% of gross domestic product continuously in the coming years. “There is no room for complacency,” he warned, and set a high goal: the convergence of Greece’s credit rating with the average of the eurozone, from which the distance is long.
“Political, fiscal and financial stability are public goods and must be preserved, especially in Greece, which just a few years ago emerged from the biggest economic crisis in its modern history,” he emphasized, reiterating his positions that stem from the experience of the bailout period.
Stournaras described the upgrading to investment level in 2023 as a milestone, pointing out that it marks the recognition of the reliability of the economic policy in recent years. Yet he noted that “the international competitiveness of the Greek economy, after the significant improvement of the previous years, showed signs of stagnation or even a slight retreat in 2023, in a deteriorating environment for international trade.” He pointed to weaknesses in areas such as the state efficiency, the speed of justice administration and bureaucracy.
The Bank of Greece forecast is for a primary surplus of 1.4% of GDP or even higher in 2023, as Stournaras said, against the budget forecast for 1.1%. For 2024, the forecast indicates a primary surplus of 2.1%, as does the 2024 budget. Debt is estimated to have decreased by 10.7 percentage points in 2023 to 161.9% of GDP, the lowest level since 2010. For 2024 it is estimated to be 152.3% and to decrease in nominal terms for the first time since 2019. Growth is seen at 2.3% this year, against the government’s projection for 2.9%.
