He hasn’t been right the last several years when he repeatedly said the bankrupt Greek economy was turning around, but Bank of Greece Governor George Provopoulos, in a speech before a London think tank on Feb. 7, said this time he’s really, really sure it is because of what he said was significant progress on reforms, although 153 still haven’t been done.
Provopoulos told an audience at the Official Monetary and Financial Institutions Forum (OMFIF) called The Greek Crisis – From Grexit to Grecovery, said, “The sacrifices are beginning to bear fruit.” “I am optimistic that Greece’s return to growth, to Grecovery, is ahead.”
It wasn’t reported whether he said almost all the sacrifices have been made by workers, pensioners and the poor who’ve been hit with a series of big pay cuts, tax hikes and slashed pensions on orders of the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that is putting up $325 billion in two bailouts.
The Troika rescue funds run out this year and it has complained that Greece is still far behind on some major reforms and hasn’t figured out how to close a 2.4 billion euro ($3.26 billion) hole in the 2014 budget and Germany – the biggest contributor to the loans – is reportedly readying a third aid package after figuring there’s little chance of a recovery just yet.
Provopoulos, however, said that Athens has met the conditions demanded by the Troika, has made large strides toward fiscal adjustment, reduced its trade deficit and promoted measures that are crucial for the country’s transformation and return to the markets.
It was essentially what he said in mid-January when he said economy was is in the “last mile” of a comeback, during the seventh year of a deep recession in which austerity measures have created record unemployment and deep poverty.
But he warned it could be undercut by growing political unrest and feuds between parties, particularly the ruling New Democracy Conservatives of Prime Minister Antonis Samaras and his bitter rival and major opposition, the Coalition of the Radical Left (SYRIZA) that is opposed to the terms of the bailouts.
With local government and European Parliament elections coming in May – which SYRIZA leader Alexis Tsipras said will lead to repudiation of the coalition and see his party come to power, Provopoulos urged the warring sides to put their differences aside and stand behind austerity.
The banker told a parliamentary finance committee that with the attainment of a primary surplus – not including interest on debt, the cost of state enterprises and municipal budgets, social security and some military expenditures – the economy is beginning to to around, an assessment disputed by many analysts who said the country’s still staggering $430 billion debt is unsustainable.