The Hellenic Fiscal Council and the Hellenic Federation of Enterprises (SEV) warned the government on Wednesday about the threat of stagnation in the economy without the implementation of reforms, along with the threat of fiscal problems in the future from state-guaranteed loans.
An HFC report published on Wednesday brought its growth projection down to 1.8 percent for this year, matching that of the government, and warned of the risks to the economy: “There is a danger of a year of stagnation, threatening the economy with a protracted imbalance with its main features being high unemployment and minimal, if any expansion.”
It went on to warn that a great number of corporations’ and taxpayers’ loans that are guaranteed by the state may well not be repaid, thereby turning nonperforming. These bad loans are estimated to add up to 3.7 billion euros out of a total 12 billion euros in state-guaranteed loans. The total unpaid balance of those loans is 6.7 billion euros and has not been included in the debt of the general government.
That means managing this debt is crucial in order to avoid an additional hole in the state finances that would lead either to an increase in budget spending or an increase in the state debt in case these arrears are undertaken by the state.
“The means to growth is private investments and the necessary condition is reforms,” SEV head Theodoros Fessas stressed at Wednesday’s annual general meeting of the federation in the presence of President Prokopis Pavlopoulos and Prime Minister Alexis Tsipras.
“We tend to consider as reforms the tax and social security contribution hikes, the horizontal cuts and the disbursement of tranches… not policies that lead to economic growth, liberalize commodity markets, abolish special privileges and build relationships of trust with the global investment community,” said Fessas.