BoG head maps way out of crisis

Presenting his annual report on the economy yesterday, Bank of Greece Governor Yannis Stournaras outlined 10 steps that would help the country find its way out of the crisis. The former finance minister also stressed that for Greece to get back on the road to recovery the creditors’ bailout review must be wrapped up as soon as possible, while calling on the government to cut expenditure instead of raising taxes further.

“We have to stay focused on fulfilling the terms of the bailout agreement, which should not be perceived as orders from the creditors but as substantial and necessary reforms that should have been implemented a long time ago. The Greek side must own the program as a necessary means of economic adjustment and reform,” Stournaras told the central bank’s 83rd annual general meeting.

He estimated that the country could emerge from the recession in the second half of the year, but added that this would require 10 conditions to be met:

– Strict adherence to fiscal adjustment, including an overhaul of the social security system and a review of the mix of measures being implemented.
– Acceleration of reforms with an emphasis on networks and services, and the simplification of rules that currently hamper competition.
– Privatizations and utilization of public properties, where the BoG sees great potential.
– Strengthening the credit system and significantly reducing the number of nonperforming loans in the next couple of years.
– Encouraging corporate investments and protecting investors, as the ratio of investment spending to GDP dropped from 26 percent in 2007 to 11.6 percent in 2014.
– Increasing exports, which have lagged their potential due to insufficient funding, the high cost of borrowing and a number of inherent structural weaknesses.
– Combating unemployment through proactive employment policies.
– Reform in education.
– Putting a brake on the flight of human capital abroad.
– Supporting social cohesion and containing poverty.