Bank of Greece Governor Yannis Stournaras on Friday appeared confident that the government is close to wrapping up a bailout review with international creditors that will pave the way for debt talks, adding that he expected to see “white smoke” from a December 5 Eurogroup meeting.
“The worst is behind us,” Stournaras told Bloomberg in a television interview. “The agenda on Greece is now fixed and economic developments in Greece are rather better than expected both on the macro side and the fiscal side.”
The country’s central banker and former finance minister said that he is not concerned about the possible effect of a referendum in Italy on a constitutional review the day before a crucial December 5 Eurogroup meeting – the last of the year and where eurozone finance ministers are expected to assess Greece’s progress and possibly initiate talks for debt relief.
Stournaras did, however, say that he would welcome a decision before the new year, which is expected to be a tense one for the bloc as elections loom in Germany, France and the Netherlands.
“The sooner we finish up with the Greek case, the better,” he said. “I think the government is now very close to closing the evaluation, so I hope that on the fifth, there’s going to be white smoke.”
Stournaras also said that he believes Greece to be close to debt sustainability targets and that any additional measures “will not be that severe.”
Responding to a question from Bloomberg's Guy Johnson regarding how he sees debt relief taking shape, Stournaras said that it would be much better for Greece if medium- and long-term measures were specified now, even if they will be implemented after the program. He suggested that clear proposals would help the International Monetary Fund make a decision regarding its participation in the Greek program and appease markets.
On the issue of Greek banks, Stournaras said that they are “much better now” and well capitalized, as well as showing progress on nonperforming loans, but added that it is still a “long workout.”
“NPLs are a big problem but also an opportunity,” Stournaras said. “We have done simulations at the central bank and so if the banks meet the targets set, then Greek banks will not need more capital. On the contrary, capital will increase.”