FRANKFURT – European Central Bank Vice President Luis de Guindos on Monday praised the progress made by the Greek economy and said that the Greek people, despite not yet feeling the improvement shown by statistical indicators in their daily lives, were nevertheless facing the future with greater optimism.
Addressing an event organised by the Foundation for Economic and Industrial Research (IOBE), de Guindos noted that non-performing loans were the most serious problem facing the Greek economy and underlined the need to use all available means to deal with the problem. He said that the Greek economy has entered a growth course, with growth rates exceeding average rates in the EU and reiterated the ECB’s estimates for more rapid economic growth rate in the Eurozone in the second and third quarter of the year.
Greek Finance Minister Christos Staikouras, addressing the event, said improving the sustainability of public debt was the safest way to achieve either a large fiscal space in the coming years, or agree on a reduction of primary surplus targets. He said that a reform of civil administration and the digital transformation of the economy were the most significant structural reforms in the country. Staikouras underlined the need to move forward with discussions to complete a European banking union and to activate a common deposit guarantee mechanism in the Eurozone. “The time has come for Europe to dominate globally. But we need to move togehter, fast and with better coordination,” he added.
Bank of Greece governor Yannis Stournaras, in his address, referred to the outlook of the Greek economy and said that the central bank estimated a growth rate of 2.5 pct for this year, from 2.2 pct in 2019. He said that non-performing loans must fall below a 20 pct target agreed with banks and added that, beyond the “Hercules” scheme, additional initiatives were necessary to reduce NPLs. Stournaras acknowledged that competitiveness gains for Greek enterprises following a reduction of labour costs have been overshadowed by a higher cost of borrowing. The average borrowing cost for Greek enterprises is 4.9 pct, compared with 2.3 pct for European enterprises, he said.