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Central Banker Stournaras Blames Crisis on Greek Budget Policy and Implicates Varoufakis

Bank of Greece Governor Yannis Stournaras said on Tuesday that Greece must wait for a second review of economic progress before tapping into financial markets.There is a long wait before this can happen,” he said, addressing Greek lawmakers. “It cannot happen before the second review is concluded.”
The Greek central banker was also critical of the stand of former Greek finance minister Yanis Varoufakis regarding the decision by the European Central Bank to cut the waiver from Greek banks. He implicated Varoufakis by stressing that 40 percent of money left the Greek credit system from January 2015 through to July 2015.
Regarding Non-Performing Loans (NPLs), Stournaras said the level of NPLs in the country is now at 240 billion euros of which 108 billion euros worth of loans (45 percent) are considered as not being serviced. Of these, 41.8 percent of the total are mortgages and 55.3 percent are consumer loans, with the remainder considered business and corporate lending.
Stournaras said that Greece’s creditors are not negative to the prospect of an equitization of NPLs, which he explained would involve companies where a majority of shareholders are deemed as “non-cooperative.”
In case a shareholder refuses to participate in a share capital increase to continue to finance a business holding a NPL, a equitization of the latter will implemented, allowing for a new shareholder to enter — one or more selected by banks holding the NPL.
Greece signed up for an 86-billion-euro bailout in return for numerous reforms in mid-2015 setting forth on a long and hard road to what is hoped will lead to recovery. Stournaras’ comments came in the wake of a Eurogroup meeting on Monday where EU finance ministers gave the green light for a 1.1-billion-euro tranche from a total of 2.8 billion euros that had been expected, stating that the full amount would come with further submission of data by Greece.
Stournaras spoke to the investigative committee probing the funding of political parties and media companies by Greek lenders. He reminded them that the country had averted bankruptcy thanks to the efforts made by governments managing Greece from 2010 to the present. He blamed Greece’s budget policy from 2008 to 2010 as the main cause of the crisis rather than the finance sector.

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