The “serious disagreement between the IMF and European institutions” puts the chances of Greece’s economic recovery at risk, said Bank of Greece governor Yiannis Stournaras on Monday.
Stournaras spoke about the Greek economy at the American-Hellenic Chamber of Commerce conference and talked about the crucial negotiations on the second bailout program review. He warned that “a possible failure to reach an agreement could halt the upward trend of the economy, resulting in the return to uncertainty and would undermine confidence.” He said that the disagreement between euro zone partners and the International Monetary Fund on debt relief measures is pushing back decisions.
The central bank chief urged Greece’s European partners to make decisions on the measures that will ensure the long-term sustainability of the state debt and reduce the target for the primary surplus to 2% of GDP from 3.5%, in order to enhance the prospects of growth.
Stournaras said that, Despite the mistakes and setbacks, despite the significant economic and social costs of the crisis, Greece has made significant progress over the last six years in terms of budget adjustments and external imbalances.”
However, he said, the harsh measures Greek governments have implemented and the burden Greek people have shouldered are at serious risk. “Despite positive forecasts for the second half of 2016 and 2017, serious risks for the Greek economy still lurk. The main danger is a possible failure to reach an agreement for the second evaluation of the program and delays or setbacks in the implementation.”
The postponement of the decisions by the European partners on the measures that will ensure long-term sustainability of the state debt, would be a constraint to investment prospects in the country. This would hinder the access of the Greek government and Greek companies to international capital money, and thus perpetuate the economic crisis.
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