Stournaras calls for more privatizations, smaller primary surplus

Bank of Greece Governor Yannis Stournaras on Monday proposed a different fiscal policy mix that would reduce the need for primary surpluses and boost growth.

Addressing an event at the French Institute in Athens, the central banker argued that it would be beneficial for Greece to propose to its creditors privatizations totaling 12 billion euros from 2018 to 2022, as this would cover the sum of reducing the primary budget surplus from 3.5 to 2 percent of gross domestic product until 2022.

The event, inspired by the publication of “Beyond Austerity: Reforming the Greek Economy,” by the MIT Press, also heard former OTE chief Panagis Vourloumis protest the need for constitutional change to accommodate the proposed reforms: “But who is going to do all this in a system that promotes, produces and reproduces mediocrity?”

Nobel laureate Christopher Pissarides, one of the book’s editors, stressed that reforms only have a positive impact when the economy is on its way up, while fellow editor Nikos Vettas, the director general of the Foundation for Economic and Industrial Research (IOBE) noted that the state finances have been balanced, “but in a way that does not permit medium-term growth.”