ECONOMY

Political tension the biggest risk

Political uncertainty constitutes the biggest obstacle to Greece’s return to growth next year, according to the the annual report of the governor of the Bank of Greece, Giorgos Provopoulos, published on Tuesday.

The Intermediary Report on Monetary Policy forecasts that the economy will grow 0.5 percent in 2014 after six years of recession, but this estimate depends on a number of uncertainties, with the political climate being the dominant factor.

Provopoulos further estimates that unemployment will drop by one percentage point to 26 percent next year, and calls for the more intensive promotion of reforms, the continuation of the fiscal adjustment as well as a halt to excessive taxation.

“The main message in the report is that we will end four years of hard efforts and sacrifices by the Greek people in 2013, having covered a major part of the distance we had to travel, but there is still some way to go for the effort to be concluded. We can be optimistic for 2014, as it will be the start of a return to growth,” stated Provopoulos.

“We should not allow ourselves to be consumed by pointless fighting, but should focus on a national cooperation to better prepare the future of our country and this can be very optimistic,” added the BoG governor, warning against political polarization on the occasion of the European and local elections in May 2014.

Regarding the reform of the public sector, Provopoulos sets as priorities the merging and closure of public corporations and agencies, the better monitoring of expenditure in the country’s main healthcare provider, EOPYY, and social security funds, the reform and modernization of the justice system for the acceleration of its operation, and the containment of corruption phenomena in the public sector.

After several years, the BoG discerns signs of improvement in banking figures, but stresses that major challenges lie ahead, with the most important being the further deterioration of loan portfolios. Nonperforming loans amounted to 29.3 percent of the total at end-June, against 24.5 percent in December 2012.