ATHENS – With foreign companies still wary of putting money into the country after the end of 326 billion euros ($370.88 billion) in three international bailouts, Bank of Greece Governor Yannis Stournaras called for an “investment shock” of 50 percent over the next few years to drive a recovery.
He was speaking at a meeting concerning the mountain of bad loans making up 40 percent of the portfolio of the country’s four biggest banks, with people unable to pay because of repeated pay cuts, tax hikes, slashed pensions and worker firings.
Despite having been bailed out three times with 50 billion euros ($56.88 billion) with proceeds from the rescue packages, Greece’s banks are still wobbly because customers can’t repay their mortgages, credit cards and loans despite being pressured, apart from the former ruling New Democracy and now-defunct PASOK Socialists who took out 250 million euros ($284.42 million) in loans without enough collateral, weren’t repaying and with the loan officers given immunity from prosecution.
Reducing “bad debt”, he added, will generate more favorable terms for borrowers and allow credit institutions to release more capital and loans for businesses, the business newspaper Naftemporiki said.
Stournaras has been the bane of Prime Minister Alexis Tsipras’ ruling Radical Left SYRIZA who said he’s brought a recovery without mentioning, if so, it’s because he reneged on anti-austerity pledges.
The bailouts ended on Aug. 20 and Greece is living off a 22-billion euro ($25.03 billion) cash buffer from rescue packages, enough to last until June, 2020, but with elections required to be held in 2019, Tsipras is eager to get the country back into the markets.
Investors though aren’t eager after he raised the corporate rate to 29 percent as part of an avalanche of hikes and with memories still fresh for some of a previous government stiffing bond holders with 74 percent losses in a futile attempt to cut growing debt.