Greece still has ‘a long way to go’ to fix imbalances in its economy and problems in the functioning of the state after the country officially exits its latest bailout program on Monday, the country’s central bank governor said in an interview with Kathimerini, published on Sunday.
Yannis Stournaras said that while painful economic reforms have tackled issues such as the very large twin deficits, competitiveness in terms of unit labor costs, improved the corporate governance of banks and liberalized the labor market, major problems persist, like the high public debt, non-performing loans, high unemployment, the country's brain-drain and bureaucracy.
He also warned the country not to backtrack on commitments to its lenders after it exits the last of its three bailouts, saying markets would abandon it. Any backpedalling could leave Greece facing major risks at a time when it would be particularly vulnerable to financial turbulence in neighboring Turkey, Italy and beyond, he added.
Athens is set to exit its latest bailout on Aug. 20 and rely on bond markets thereafter to refinance its debt after a nearly nine-year debt crisis that shrank its economy by a quarter and forced it to implement painful austerity.
“If we backtrack on what we have agreed, now or in the future, the markets will abandon us and we will not be able to refinance maturing loans on sustainable-debt terms,” he told the paper.
“If there is strong international turbulence, either in our neighboring Italy or Turkey or in the global economy, we will face difficulties in tapping markets given that the sensitivity coefficient of Greek bonds remains high,” Stournaras said. [Reuters, Kathimerini]