Any further delay in the completion of the bailout review would threaten the achievement of the country’s economic goals for next year, Yannis Stournaras wrote in the Bank of Greece’s intermediary report, which came out on Friday. The central bank governor also warned about the negative impact of fiscal relaxation, including the government’s handouts to pensioners, and called on the creditors as well as the government to act – with realism and flexibility – for “the review to be completed as soon as possible.”
The Bank of Greece estimates that the economy will expand marginally this year (by 0.1 percent), while in 2017 it will grow 2.5 percent before adding 3 percent in 2018 and 2019.
“There is not much time before the upcoming national elections in several eurozone member-states,” regarding the completion of the review, Stournaras wrote, asking Athens and the country’s creditors to put aside any issues that are creating serious problems in the implementation of the program and reassess them when the differences have been reduced to avoid any departures from what has been agreed.
The BoG chief warned in particular that the progress already achieved “should by no means be interrupted,” and called on the government to “focus on the objectives of the program and accelerate the implementation of the reforms and privatizations agreed.”
He also gave his viewpoint on the primary surplus of the budget, saying it could be harmed by fiscal relaxation decisions such as the Christmas bonus for pensioners and other measures that would cost some 0.4 percent of gross domestic product.
Stournaras further warned the government that the increased taxation may well have greater-than-anticipated negative consequences on economic activity in Greece, and called for an improvement in the fiscal policy mix. Other warnings concerned the obstacles that are hampering business confidence and investments, the gaps in the legislative framework for tackling nonperforming loans, and the risks from the international environment and the refugee crisis.